Toyota Relocating Corporate Offices To Texas

[4-2-7]

The bigger picture is that Texas has become more economically competitive while California has become less so, particularly for energy- and labor-intensive industries. Let us count the ways.

Start with right-to-work laws in southern states that have limited unionization and thus labor costs. Just 4.8% of workers in Texas and 6.1% in Tennessee belong to a union compared to 16.4% in California. Real estate is also cheaper in the South due to less restrictive zoning and environmental regulations, and taxes are lower. According to the Tax Foundation, the state-local tax burden is more than 50% higher in California than in Tennessee and Texas, which don't levy a personal income tax. California's top 13.3% marginal rate is the highest in the country.

Electricity prices are also about 50% higher in California than in the South due to the Golden State's renewable-energy mandate, and its gas is 70 to 80 cents per gallon more expensive because of taxes and blending requirements.

The hostility to fossil fuels has cut California's oil production in half from its 1985 peak while output in Texas has doubled in three years and lifted incomes. The Bureau of Economic Analysis has ranked Midland the country's fastest growing metropolitan area in personal income for the past three years. Nearby Odessa was second for the last two. Between 2008 and 2012, personal income grew 8.05% in Midland and 6.98% in Odessa compared to 4.48% in San Jose and 1.81% in Los Angeles. In March, the unemployment rate was 3.2% in Odessa versus 6.8% in San Jose and 9.7% in L.A.

No city epitomizes California's malaise better than Los Angeles, which hasn't recovered its mojo since the post-Cold War aerospace wind-down. Since 1990 its employment base has declined by 3.1%, which is more than even Detroit (-2.8%). Job growth in Dallas, Houston and San Antonio exceeded 50% over the same period.

According to a report last year by the Los Angeles 2020 Commission, led by such Democratic grandees as Mickey Kantor, Gray Davis and Hilda Solis, Los Angeles added one million new residents between 1980 and 2010 but lost 165,000 jobs. L.A.'s poverty rate of 17.6% is higher than any other major American city. The city has developed a "barbell" economy "typical of developing world cities, like São Paulo," the report notes, with "growth at the top of the income ladder and at the bottom, while the middle class shrinks year after year."

Mr. Brown, promoting his re-election tour, doesn't seem all that concerned that California's middle-class jobs engines are fleeing. "We've got a few problems, we have lots of little burdens and regulations and taxes," the Governor said on Monday, "but smart people figure out how to make it." California's problem is that smart people have figured out they can make it better elsewhere.

http://online.wsj.com/news/articles/...175451998.html

[JCricket]

Originally Posted by 4-2-7

The bigger picture is that Texas has become more economically competitive while California has become less so, particularly for energy- and labor-intensive industries. Let us count the ways.

Start with right-to-work laws in southern states that have limited unionization and thus labor costs. Just 4.8% of workers in Texas and 6.1% in Tennessee belong to a union compared to 16.4% in California. Real estate is also cheaper in the South due to less restrictive zoning and environmental regulations, and taxes are lower. According to the Tax Foundation, the state-local tax burden is more than 50% higher in California than in Tennessee and Texas, which don't levy a personal income tax. California's top 13.3% marginal rate is the highest in the country.

Electricity prices are also about 50% higher in California than in the South due to the Golden State's renewable-energy mandate, and its gas is 70 to 80 cents per gallon more expensive because of taxes and blending requirements.

The hostility to fossil fuels has cut California's oil production in half from its 1985 peak while output in Texas has doubled in three years and lifted incomes. The Bureau of Economic Analysis has ranked Midland the country's fastest growing metropolitan area in personal income for the past three years. Nearby Odessa was second for the last two. Between 2008 and 2012, personal income grew 8.05% in Midland and 6.98% in Odessa compared to 4.48% in San Jose and 1.81% in Los Angeles. In March, the unemployment rate was 3.2% in Odessa versus 6.8% in San Jose and 9.7% in L.A.

No city epitomizes California's malaise better than Los Angeles, which hasn't recovered its mojo since the post-Cold War aerospace wind-down. Since 1990 its employment base has declined by 3.1%, which is more than even Detroit (-2.8%). Job growth in Dallas, Houston and San Antonio exceeded 50% over the same period.

According to a report last year by the Los Angeles 2020 Commission, led by such Democratic grandees as Mickey Kantor, Gray Davis and Hilda Solis, Los Angeles added one million new residents between 1980 and 2010 but lost 165,000 jobs. L.A.'s poverty rate of 17.6% is higher than any other major American city. The city has developed a "barbell" economy "typical of developing world cities, like São Paulo," the report notes, with "growth at the top of the income ladder and at the bottom, while the middle class shrinks year after year."

Mr. Brown, promoting his re-election tour, doesn't seem all that concerned that California's middle-class jobs engines are fleeing. "We've got a few problems, we have lots of little burdens and regulations and taxes," the Governor said on Monday, "but smart people figure out how to make it." California's problem is that smart people have figured out they can make it better elsewhere.

http://online.wsj.com/news/articles/...175451998.html

Some interesting points. I am not sure they are all accurate, but well intended for sure.

I have to ask, is this a good thing that Toyota is moving to texas? I understand that it is for their bottom line. But what about the employees? When should a companies dedication to its employees trump increases to the bottom line? At some point "free market" no longer is free and the people become slaves to the businesses. I can't see when that is ever good. When a business has to move, that is one thing. To me it is a bit unethical to fire a plant full of people so that you can rehire a new group of employees at a lower wage.

I do think you are correct in the reasoning that Toyota did this for income tax, energy cost, real-estate costs, etc. So why not bring the employees with them to texas and share some of the savings with them. Thus they are more competitive and the employees win too? Just a thought

[4-2-7]

Originally Posted by JCricket

Some interesting points. I am not sure they are all accurate, but well intended for sure.

I have to ask, is this a good thing that Toyota is moving to texas? I understand that it is for their bottom line. But what about the employees? When should a companies dedication to its employees trump increases to the bottom line? At some point "free market" no longer is free and the people become slaves to the businesses. I can't see when that is ever good. When a business has to move, that is one thing. To me it is a bit unethical to fire a plant full of people so that you can rehire a new group of employees at a lower wage. What it really amounts to is a company becoming a slave to the state.

I do think you are correct in the reasoning that Toyota did this for income tax, energy cost, real-estate costs, etc. So why not bring the employees with them to texas and share some of the savings with them. Thus they are more competitive and the employees win too? Just a thought

Toyota is moving for all those reasons. Employees are offered their jobs if they want to relocate. Their wage will stay the same, they get $10,000 to help in the cost of the move. No income tax in Texas so thats about a 20% raise. Home cost between the two locations is around 50% less. All cost of living expenses are less in Texas.

This is a huge win for employees if they are able to move. Even if they own a house here with a mortgage they can probably get out of debt.

[JCricket]

Originally Posted by 4-2-7

Toyota is moving for all those reasons. Employees are offered their jobs if they want to relocate. Their wage will stay the same, they get $10,000 to help in the cost of the move. No income tax in Texas so thats about a 20% raise. Home cost between the two locations is around 50% less. All cost of living expenses are less in Texas.

This is a huge win for employees if they are able to move. Even if they own a house here with a mortgage they can probably get out of debt.


What it really amounts to is a company becoming a slave to the state.

A slave to the state? I don't think I'll ever buy that one. I am 50 and have had numerous jobs. I have been through all sorts of downsizing, outsourcing, etc. it never had to do with the state, never. It did have to do with corporate profits, sometime needed, other times just plain greed.

[4-2-7]

Originally Posted by JCricket

A slave to the state? I don't think I'll ever buy that one. I am 50 and have had numerous jobs. I have been through all sorts of downsizing, outsourcing, etc. it never had to do with the state, never. It did have to do with corporate profits, sometime needed, other times just plain greed.

I wouldn't call this move "Greed" although a nice buzz word for some. Businesses need an environment to thrive they can't and will not stay in an area that hinders growth. It would just be stupid to stay at a location that cost you and your employees so much more to live and operate. I live in Cal so I know how high all the cost are climbing. I love the state that I was born and raised in but the bureaucracy is even pushing me out of here.

"Two dozen California companies have said they are tired of the business-bashing in Sacramento, along with the high taxes."

“I tracked for 2011, that 254 companies of all sizes and shapes and kinds left the state for primarily other states,” said Vranich, the president of Spectrum Location Services in Irvine.

He told KCRA 3 that companies leave California for three primary reasons: “High taxes, excessive regulations and the threat of really ridiculous lawsuits.”

[donquixote99]

No income tax in Texas so thats about a 20% raise.

Who makes up your data for you? Tell them to do a better job.

The California state income tax has brackets, starting at 2% and topping out at 12.3% for income over $508K. See http://www.tax-brackets.org/californiataxtable

A single person with no dependents would, according to the tax calculator on that page, pay $4170 in states tax on an income of $75,000. That works out to 5.6%. Not 20%.

[BlueStreak]

Originally Posted by donquixote99

Who makes up your data for you? Tell them to do a better job.

The California state income tax has brackets, starting at 2% and topping out at 12.3% for income over $508K. See http://www.tax-brackets.org/californiataxtable

A single person with no dependents would, according to the tax calculator on that page, pay $4170 in states tax on an income of $75,000. That works out to 5.6%. Not 20%.

It's not about the employees and their taxes anyways. Toyota would locate in Massachusetts, if it was somehow to corporates advantage. Nobody gives a hoot about the employee. Figure it out, guys.

[BlueStreak]

Originally Posted by donquixote99

Who makes up your data for you? Tell them to do a better job.

The California state income tax has brackets, starting at 2% and topping out at 12.3% for income over $508K. See http://www.tax-brackets.org/californiataxtable

A single person with no dependents would, according to the tax calculator on that page, pay $4170 in states tax on an income of $75,000. That works out to 5.6%. Not 20%.

Besides, Don. IIRC, he has made comments about how "people" pay 50% federal tax, the corporate tax is 50%, now "people" pay 20% state tax.

As they say here in the Old Dominion, "He's talkin' out his ass.". Just ignore the troll.

Dave

[mpholland]

Originally Posted by donquixote99

Who makes up your data for you? Tell them to do a better job.

The California state income tax has brackets, starting at 2% and topping out at 12.3% for income over $508K. See http://www.tax-brackets.org/californiataxtable

A single person with no dependents would, according to the tax calculator on that page, pay $4170 in states tax on an income of $75,000. That works out to 5.6%. Not 20%.

Not to mention that property taxes in Texas are about double, so if you sold a home in California for 300K and bought one in Texas for 200K, you are still going to be paying higher property taxes in Texas. Texas would still probably have a slight tax benefit to the moving employee, but it won't be as great as it looks if he buys his own home.

[4-2-7]

Meanwhile, the departure from Torrance will leave more than a gap in employment.

According to the city's Comprehensive Annual Financial Report, the company was also Torrance's third-highest property taxpayer, with a taxable assessed value of $473 million or over 2 percent of the city's total taxable assessed value last year. Toyota also paid the city $203,037 in water revenue.

Torrance had a $271.5 million budget in 2013 and about $121.5 million in long-term debt. In December 2012, credit rating agency Moody's downgraded Torrance to Aa2 from Aa1, citing a moderately weakened general fund compared to pre-recession levels, increasing pension payments and public safety costs.

The departure could also hurt efforts by Los Angeles to regain its footing in the job market. The region's unemployment rate stood at 8.1 percent in February, well above the national rate of 6.7 percent.

http://www.reuters.com/article/2014/...A3R1AF20140428