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    Senior Member AirborneSapper7's Avatar
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    Bye, Bye California

    Bye, Bye California

    John Ransom | May 03, 2014


    Another blow was struck for competition, common sense and low taxes as Toyota Motor Corp. announced that it will be moving its campus in Torrance, California to a suburb outside of Dallas, Texas.
    “Toyota Motor Corp. is moving substantial parts of its U.S. headquarters in Torrance, Calif., to suburban Dallas,” writes the Detroit News, “as the world’s largest automaker seeks savings from its U.S. sales unit, people familiar with the matter said.”
    Although no figures are yet available, anecdotal evidence suggests that people are fleeing California, not just companies.

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    SFGate.com says that 66% of all state revenue now comes from personal income taxes, and that the top 1% paid 41% of all personal income taxes in 2011, while half of all adult Californians paid no income tax at all.
    And that was before Proposition 30 passed, a measure that raised the top income tax rate in California to 13.3%, the highest in the nation.
    That plays into part of the corporate moves. Imagine being able to give employees a pay increase between 8% and 13.3% by moving from California, to say, Texas.
    Not coincidentally, Texas Gov. Rick Perry has spent a great deal of time advertising to Golden Staters the benefits of moving to Texas. Similarly, Indiana and Wisconsin have taken pains to try to recruit corporate relocation from high tax jurisdictions like neighboring Illinois.
    Imagine how much happier Toyota salespeople will be, who after all, get paid more money if they sell more cars and now will be able to keep more.
    Show me a unionized employee who got a pay increase of 8%-13.3% this past year.
    To add to the injury of a tax increase, California also made the tax increase retroactive, which raises a whole bunch of constitutional concerns.
    AdverseEvents founder Brian Overstreet told CBN News that he “has suddenly found himself owing an extra $250,000 because of this sudden move by the state to impose back taxes for the past five years.”
    Ironically, California is sitting on one of the largest oil finds, with an estimated 400 billion barrels of oil, or about half of Saudi Arabia's conventional reserves. But instead of tapping that economic potential, the state is taking the lazy man's route out by making the millionaires pay.
    So oil companies are leaving California in droves, as our colleague Erika Johnsen at HotAir pointed out in March.
    Destination? You guessed it: Texas.
    Four of the top six states in GDP growth between 2008 and 2012 are high-energy states. North Dakota, Texas, Alaska and Louisiana posted GDP growth between 8% and 35% in the five years through 2012.
    Even Hollywood is fleeing the Golden State.
    Despite attempts by California to use the millionaire tax to produce subsidies in order to keep film production on the West Coast, states and countries that are hungrier for the jobs films produce, temporary though they may be, are outbidding them, notes Variety, the bible for all things Hollywood.
    California currently pays a 20% subsidy for production costs. Australia pays 30% subsidy for production costs.
    While the correct subsidy number should be 0% to offset production costs, California's political reaction to this Hollywood holocaust is predictably foolish.
    “Steve Dayan, who serves as vice chairman of the state film commission and secretary-treasurer of Local 399 of the Intl. Brotherhood of Teamsters,” writes Variety, “spoke at the Feb. 22 labor rally, promising his union would be willing to repeat its 1999 action of encircling the State Capitol in Sacramento with 200 Teamster trucks — a tactic used to campaign for incentives. ‘We are not going to let other states poach our jobs,’ he said, evoking loud applause from the 700-plus attendees.”
    Yeah, keep fighting the last war.
    Presumably, Dayan believes that they can just raise taxes on millionaires even higher or, better yet, Toyota Motor Corp. to subsidize the jobs that California can't compete for on the open market.
    In other words, expect the exodus from California to continue.


    http://finance.townhall.com/columnis...2721/page/full
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    Senior Member JohnDoe2's Avatar
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    Texas is giving Toyota, a foreign owned business,
    $40 MILLION of taxpayer money, to move to Texas.


    Texas offers Toyota $40M for HQ move- Time Warner Cable ...

    austin.twcnews.com/content/news/.../texas-offers-toyota--40m-for-hq-mo...‎
    6 hours ago - The state of Texas has offered Toyota $40 million as the automaker begins moving its U.S. ... since last year, trying to convince top employers there to move to Texas...
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    Senior Member JohnDoe2's Avatar
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    Toyota to Unify North American Operations in Texas

    By Alan Ohnsman Apr 28, 2014 2:00 PM PT

    Toyota Motor Corp. plans to consolidate U.S. sales, engineering and finance operations to suburban Dallas, sending 4,000 jobs from California, New York and Kentucky to a new North American headquarters.

    The shift to Plano, Texas, affects about 2,000 people at Toyota’s U.S. sales headquarters in Torrance, California, 1,000 employees from its Kentucky engineering and manufacturing unit, and some staff from its holding company in New York, the carmaker said in a statement yesterday. About 1,000 people from its finance company will also go to Texas by 2017, Toyota said. Headquarters construction is projected to be complete in late 2016 or early 2017.


    “Toyota’s announced move to Texas is a shock since the automaker has been part of the Southern California community for decades, but it indicates that money -– and tax incentives –- talks when it comes to headquarters locations,” said Jack Nerad, senior industry analyst for Kelley Blue Book. “The dollar savings from the relocation should be fairly easy to quantify, but what’s much harder to quantify is the cost in business disruption and ‘brain-drain’ such a move can cause.”


    The relocation is a win for Texas Governor Rick Perry’s campaign to lure California companies and a blow to the Golden State, the biggest U.S. auto market and proponent of the strictest clean-air rules.

    Toyota’s Prius hybrid has been California’s top-selling model for the past two years and helped secure a leading 22 percent market share. Perry has made repeated visits to California to entice businesses to his state with promises of lower taxes and easier regulations.

    Photographer: Yuriko Nakao/BloombergThe shift to Plano, Texas, affects about 2,000 people at Toyota Motor Corp.’s U.S.... Read More

    Texas Investment

    The main goal of the shift to Texas is to boost efficiency, not cost savings, Jim Lentz, Toyota’s North American chief executive officer, said in a phone interview. Lentz only discussed the matter with Perry yesterday, when he also notified California, he said.

    “This is probably the most significant change we’ve ever had” in North America, Lentz said in an interview yesterday. “In the next three years we are going to bring three separate entities to the same headquarters for the first time.”


    While the sales, engineering and corporate units will initially remain as separate legal entities after the shift, “it may make sense over time to combine these three entities into one,” Lentz said. He didn’t provide a cost for the new facilities and relocation of workers. The latter will be the biggest expense of the relocation, he said.


    Perry’s office yesterday said it expects Toyota to invest more than $300 million in the Plano headquarters, supported by $40 million from the Texas Enterprise Fund.


    Relocation Offers


    “Toyota understands that Texas’s employer-friendly combination of low taxes, fair courts, smart regulations and world-class workforce can help businesses of any size succeed and thrive,” Perry said in a statement.

    “We’re proud that both the Tundra and Tacoma bear the words ‘Made in Texas,’ and we’re excited our state will be the nexus for Toyota’s North American operations moving forward.”


    While some California employees may not choose to relocate to Texas, “we’re going to encourage everyone to go,” Lentz said. “If they want to come, there’s a job for them.”


    Toyota’s average revenue per vehicle is $33,287 in North America, where it earns a 3.3 percent operating margin, while in Japan, Toyota gets $29,223 per vehicle and a 10.5 percent operating margin, according to Kevin Tynan, auto analyst with Bloomberg Industries.


    The world’s largest carmaker, which is based in Toyota City, Japan, has more than 5,300 California employees, most at its Torrance campus near Los Angeles in sales, finance, marketing, engineering and product planning. Erlanger, which also manages Toyota’s North American factories, is near Cincinnati.


    ‘Extremely Disappointed’


    “Obviously, we are extremely disappointed by Toyota’s decision,” Kentucky Governor Steven Beshear, a Democrat, said in a statement.

    “We would have welcomed the opportunity to discuss options with Toyota, but we will now turn our attention to preparing for this transition.”


    Toyota will keep its Georgetown manufacturing plant in Kentucky, supplier facilities, as well as some other units, according to a letter from the automaker’s executives to Beshear that was dated yesterday.


    “We are continuing to add good jobs at the Georgetown plant,” according to the letter. The site is adding assembly of Lexus ES 350 sedans to output of Toyota Camry mid-size cars and other models.


    Nissan Motor Co. (7201)
    also left California in 2006, relocating its North American headquarters in lower-cost Tennessee. In Nissan’s case, only 42 percent of employees initially chose to relocate.


    Leaving California


    In February, Occidental Petroleum Corp. (OXY) said it was splitting its operations, keeping a portion in California and setting up a new unit in Houston. Raytheon Co. (RTN), a technology company that specializes in defense, last year moved its space and airborne systems unit to McKinney, Texas, from southern California. Last year, Tokyo-based security software company Trend Micro Inc. said it would move its U.S. headquarters from Cupertino, in Silicon Valley, to Irving, Texas, according to the Perry administration.

    While Texas is home to Toyota’s pickup truck plant in San Antonio and a General Motors Co. (GM) factory in Arlington, the state traditionally hasn’t been a center of auto industry activity.


    Annual Forecast


    Toyota’s decision to scale back in California, where it established operations in 1957, comes as the company expects to report a record 1.87 trillion ($18.3 billion) of net income when it releases fiscal year results next month. Along with rising sales in North America and other international markets, Toyota’s earnings this year are benefiting from a decline in the value of the yen, which surged in 2011.

    Since the company made that forecast, it agreed to a $1.2 billion fine to settle a U.S. Justice Department investigation into how it delayed recalling popular models after complaints of unintended acceleration.


    Toyota’s American depositary receipts rose 0.5 percent to $107.07 at the close in New York yesterday and have fallen 12 percent this year.

    Toyota’s move is about more than just saving money, saidJeff Schuster, an auto analyst with LMC Automotive.

    “By locating in Texas, they locating closer to where they build,” said Schuster, who is based in Troy, Michigan. “The majority of vehicles sold by Toyota now are built here. So it doesn’t make as much sense as it did initially to be in California, when it set itself up to be closest to Japan and the ports.”


    To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net


    To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Niamh Ring


    http://www.bloomberg.com/news/2014-0...-to-texas.html
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    Senior Member AirborneSapper7's Avatar
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    The Next Time Anybody Insists California Has Recovered, Read This

    Scott Shackford|Apr. 14, 2014 11:31 am


    Credit: Steve Rhodes / photo on flickr

    I have been pushing back on claims that California's economy is fine and awesome and should be used as a model for other states' recoveries. California is doing better these days than five years ago; but so are most states. However, it's sheer bullshit to say that the state doesn't still have huge, dire economic issues, and Gov. Jerry Brown, like previous California governors, is concealing the problems with accounting tricks.
    So the next time anybody insists that California's problems are "fixed" or suggests that Brown's handling of the state's fiscal crisis should be a model for other states, drop some knowledge on them, courtesy of David Crane at Bloomberg View. He explains how Brown (and other governors) is able to trick journalists into thinking the state of the state is better than it really is:
    They avoided scrutiny thanks to an accounting method known as "cash-based budgeting," which recognizes expenses only when cash changes hands and treats any cash received, even borrowed cash, as revenue. That’s how New Jersey Governor Chris Christie "balanced" New Jersey’s budget in 2010: by simply pushing a $3 billion pension payment from one year into the next.
    Similarly, Brown is using cash-based budgeting to underreport the cost of an employee benefit—retiree health care—by $3 billion. The governor could have chosen to report the expense at its full size, but to do that under cash-based budgeting, he would have had to actually contribute $3 billion in cash to a retiree health-care trust fund.
    That’s exactly what governors are supposed to do. Retiree health-care expenses, like pensions, are supposed to be pre-funded in order to protect future generations from having to pick up an earlier generation's costs. But Brown chose not to do so, making his budget look rosier than it is. This shortchanges future generations, which will have less money for their own services because they will have to pay off the skipped costs.
    Brown is also ignoring a $3 billion in required payments to the state teacher pension fund, so really there's $6 billion in payments unaccounted for by the state's budget. But thanks to these games, it's not counted as debt. And not paying it helps avoid putting the state back into a spending deficit, and the lack of a deficit is what folks are pointing to when they insist California has recovered. Crane notes:
    Even though California teacher pensions—and therefore that debt—are guaranteed by the state, for accounting purposes the state treats that obligation as off its balance sheet, as if it’s not on the hook. When the trust fund runs out of money, the debt will total more than $600 billion.
    Crane concludes by pointing out how badly California is leeching off its citizenry. Despite getting more money from taxpayers than ever, the taxpayers themselves are getting crap out of it:
    Just as California's budget wasn’t fixed in 2000 or 2007, it isn't fixed in 2014. In fact, even though revenue, taxes and fees are higher now than they were the last time California reported a balanced budget, in 2007, state spending on most state services is lower. Spending on welfare, universities, courts and parks is down more than 20 percent because spending on employee salaries, pensions, retiree health care, debt service and Medicaid is up more than 20 percent.
    And even with that huge increase in spending on its own workers, there's still billions of dollars in debt that's unaccounted for.

    http://reason.com/blog/2014/04/14/th...sts-california
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