It was not so very long ago that many companies created a headquarters in Silicon Valley. Now, those companies are fleeing in droves. There are many reasons that companies are leaving Silicon Valley in record numbers. New and proposed laws coming out of Sacramento show that lawmakers are not interested in promoting the Silicon Valley’s business economy. Furthermore, the high cost of living hurts everyone, and people in Silicon Valley pay some of the highest taxes in the United States.
Sacramento lawmakers have not helped companies want to stay in Silicon Valley. Complex business regulations make it more expensive to operate in California than in many other states, including Texas and New Hampshire, where many businesses are going. For example, the 2018 Consumer Credit Act makes California companies jump through many hoops when they collect financial details from consumers. Proposed legislation will make companies put more people on their payroll as opposed to using freelancers.
The cost of living remains sky-high in Silicon Valley. State lawmakers have already passed laws to raise the minimum wage far above federal levels. The average home in Silicon Valley sells for $1.6 million. New legislation out of Sacramento will require landlords to cap rents at a high level, even if it is harder to find a job. Loans can be hard for businesses to get in California. Some commercial loans only apply to some communities in the hopes of revitalizing those areas.
Taxes Are Unbelievable
California businesses and people have to pay some of the highest taxes in the United States. California has the highest personal tax rate in the United States, which can be a factor for businesses looking to get and retain highly qualified employees. Currently, individual tax breaks are going to be gone by 2025, so employees will see more of their income taken out of their paycheck before they even receive it. California’s alternative minimum tax law virtually assures that most company owners will pay 26 % of their income in taxes. Property taxes are also very high in Silicon Valley. From 2007 to 2017, many property owners in Silicon Valley saw their property taxes go up by more than $2,600.
If you own a Silicon Valley business and are tired of constant new laws coming out of Sacramento cutting into your profits, then it may be time to think about joining others moving to New Hampshire, Texas and Washington. These business-friendly states seem poised to accept new businesses and want to see them thrive.