Nevada Seeks To Poach Firms From California With Lower Tax And Costs

by Leroy Baker, Tax-News.com, New York

01 February 2006

"The case of California's missing bears has been solved. The bears have been found doing business in Nevada." This is the tongue-in-cheek slogan being used for a new campaign by Nevada state officials who are attempting to poach more companies from neighbouring California with the promise of lower taxes, employment costs and utility bills.

The campaign, titled 'Missing,' features the California state flag with an outline of the missing bear and a happy California cow missing from a farm, which are now, according to the advert, to be found in Nevada.

The 'Missing' campaign was developed by the Nevada Economic Development Partnership, a coalition of economic development organizations throughout Nevada, which states that the bear and cow's 'migration' east to Nevada is symbolic of the continuing trend for companies from the Golden State to relocate to Nevada due to California’s high cost of doing business.

In Fiscal Year 2005, Nevada reported that 28 California companies relocated to the Silver State. The Partnership also noted a 50% increase in inquiries from Californian companies during the past year.

Nevada’s Lt. Governor Lorraine Hunt, chair of the NCED, explains that the state has a number of innate advantages over its more outwardly affluent but expensive neighbour, including no corporate income tax, no personal income tax and no inventory tax.

“California companies continue to cite workers’ compensation rates, high taxes and unreliable energy costs as major reasons for wanting to leave California for other more affordable business climates like Nevada,” stated Hunt.

“They also mention California’s highly regulated business environment as troublesome," she added.

Over in Sacramento, Californian officials have dismissed the figures quoted in the Nevada campaign as only a tiny fraction of the companies still doing business in the state.

Nonetheless, the decision by Nissan Motor Co. in November to move its North American headquarters along with 1,300 jobs from California to Tennessee, to take advantage of the lower cost of doing business in the south-eastern state highlights the cost pressures currently faced by businesses in California.

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