LOS ANGELES, September 23, 2019 /PRNewswire-PRWeb/ -- California's large urban areas continue to be the costliest places to do business in the western United States, while cities in Texas top the list of least expensive cities, according to newly released data from the 23rd annual Kosmont-Rose Institute Cost of Doing Business Survey.
This summer, the Golden State was identified as a high-cost state in featured articles in The Economist, which noted that many California residents and businesses—struggling to keep up with the ever-increasing costs of housing, taxes, and fees—continue to flee expensive coastal areas for more affordable cities in Texas, Arizona, Nevada, and Oregon. "Many cities in California are raising revenue through new hotel taxes, utility taxes, and sales taxes," explained Kosmont Companies chief executive Larry Kosmont, "but these tax hikes continue to make California an expensive place to live and an expensive place to do business."
The annual Kosmont-Rose Institute Cost of Doing Business Survey, conducted for the 23rd time in 2018, is a longstanding collaboration between the Manhattan Beach-based economic development consulting firm Kosmont Companies and the Rose Institute of State and Local Government at Claremont McKenna College.
The Survey considers business license (or gross receipts) taxes or fees, sales taxes, property taxes, utility taxes, hotel taxes, and development fees. Here's what it found:
The Los Angeles and San Francisco Bay areas are still ranked as the two most expensive major metropolitan areas in the western United States. Eleven of the twenty most expensive western cities are in these areas: seven in Los Angeles County and four in the San Francisco Bay area.
These high rankings are related to: high business license fees (ranging from $36,500 in Portland, Oregon to $0 in Phoenix, Arizona for a medium-sized retail business); high sales tax rates (ranging from 10.25% in Santa Monica, California to 0% in Portland, Oregon); and property tax rates (with Longmont, Colorado topping the list at 7.96%, well above the Survey's median of 1.16%).
TEXAS AND NEVADA CITIES ARE A BETTER BARGAIN FOR CORPORATE AMERICA
Several large western metropolitan areas are included in the 2018 list of the twenty least-expensive cities, including Dallas-Fort Worth, Houston, San Antonio, Las Vegas, and Reno. Many of these cities have low or no business license taxes, corporate income taxes, and property tax rates. Many of these cities are also in states with low statewide corporate or personal income taxes and sales taxes.
When California's largest budget was passed in June, policymakers emphasized the importance of tackling the crippling housing shortage and tax burden. California and local cities struggle to retain the middle-class residents and jobs that are leaving the state, with cities now pursuing special districts (such as EIFDs) to finance infrastructure, economic development, and housing.
At the same time, Governor Newsom identified a key economic development strategy: pairing EIFDs with the new federal Opportunity Zone tax incentive program to leverage private investment for vital development in certain low-income areas.
As the State's political battlefield starts to consider raising corporate taxes through a proposed split roll initiative, Governor Newsom might have the ability to force a discussion on an overhaul of California's lopsided tax codes.
Currently, 1% of the taxpayers typically produce 50% of the State's budget tax base. If commercial property split roll is approved, the State would once again single out businesses for more taxes by stripping away the long-standing Proposition 13 protections, which cap property tax rates and annual increases for all properties.
Please see the attached image for the twenty most & least expensive cities in the west in 2018, according to the Survey's results.
SOURCE Kosmont Companies
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