Grow Smarter Plan: Reversing the Worst Business Climate in America
Under Gavin Newsom, California is weighed down by burdensome business taxes and anti-business regulations. The data doesn’t lie. We have America’s:
- highest income tax rate,
- highest sales tax,
- highest gas tax, despite the 2nd worst roads,
- and 9th highest corporate tax rate.
California’s business climate is not competitive, and people and businesses are voting with their feet. More than 50 major corporations have left California since 2014 – and most since Gavin Newsom took office. We are losing the basis of the most innovative economy in the world. It’s not just Oracle and Tesla – Hewlett Packard, Digital Reality, Stitch Fix, Norton Lifelock, Charles Schwab, and dozens of other companies have fled California for more competitive states.
As businesses line up to leave the state, Newsom lives in a fantasy world, saying in his January 2021 State of the State address that “there is literally no better place to do business.” In reality, over-regulation, exorbitant fees, and unreasonable taxes are driving companies out of California.In addition to overly restrictive COVID mandates that permanently shuttered 19,000 businesses without getting us better health outcomes, Newsom continues to take the 49th ranked state in business climate and make it worse. Newsom signed AB5, decimating protections for contract workers vital for start-ups, and supported Proposition 15, which would have raised property taxes on businesses across California and forced even more companies out of state.
As companies allow more employees to work from home, more people are leaving California for states with a lower cost of living.
I am running to set California families and businesses free from this crushing tax burden. I will create a competitive tax climate that will restore California as America’s best place to create and grow a business. Here’s my plan:
Below, I’ve outlined 6 parts of my Grow Smarter Plan.
Grow Smarter Step 1: Pass Liability Protection for COVID
Newsom’s lockdowns wiped out a third of California’s 76,000 restaurants and destined 1.2 million restaurant workers for unemployment. Except during the first few weeks when we didn’t know how the disease spread, I would have allowed all businesses to remain open throughout COVID.
Newsom and the California Legislature failed to pass vital COVID liability protection for businesses, schools, and churches, and as a result many insurance companies have withdrawn related protection. One COVID lawsuit for an uninsured organization poses such risk that groups are resorting to vaccine passports.
I will immediately re-engage the Legislature on this topic – and if they refuse to advance legislation, I’ll sign an executive order to enable businesses to open with insurance coverage without fear.
Grow Smarter Step 2: Ensure Added Unemployment Benefits End
Extended unemployment benefits were necessary during the early pandemic because the government lockdowns forced many out of jobs. For the last several months, however, unrestricted payments have kept people at home while businesses are starved for workers.
In May 2021, California added 104,500 jobs, but its workforce grew by just 12,400 – meaning 90% of new jobs were not filled. This is a big part of the reason California has the 4th highest unemployment rate and has only added back 52% of the jobs lost during the pandemic. Putting it in perspective, the national average is 66% and states like Florida and Texas have regained 71% and 76% respectively.
If supplemental unemployment benefits are still active when I take office, I will join at least 26 other states and end them immediately. Our small businesses depend on this vital support.
Grow Smarter Step 3: Reduce the LLC Filing Fee to the National Median
California’s annual filing fee for an LLC is $300 more than any other state and 16 times the national median. Even New York only charges $9 every other year.
For this exorbitant fee, California businesses receive nothing more than other states provide.
I will reduce the filing fee to the national median of $50.
Grow Smarter Step 4: Undo Independent Contractor Restrictions (AB 5)
Newsom signed AB 5 into law in September 2019, forcing many California companies to convert independent contractors into employees even when the contractors preferred their independent status. The bill was so riddled with problems that just 5 months after its signing, 30 bills had been introduced to make room for exceptions to the AB 5 law. A year later, AB 2257 passed, granting 109 exemptions to AB 5. 59% of Californians voted to make yet another exception to this law last November on Proposition 22, allowing app-based drivers for companies like Uber and Lyft to remain as contractors.
Any law with this many exceptions doesn’t deserve to be a law. I will undo this burdensome regulation to free businesses and millions of gig economy workers.
Grow Smarter Step 5: Protect Companies from Legal Abuses by Private Attorneys
The Private Attorneys General Act (PAGA) allows employees to sue their employers for alleged labor code violations. While it’s important that employees have legal pathways to protect rights and ensure a hospitable work environment, private attorneys are taking advantage of PAGA to hurt businesses.
PAGA notices to employers of forthcoming legal action have increased from 11 in 2006 to 4,317 in 2018. An independent review of over 1,000 of these notices between 2016 and 2018 found that at least 75% did not protect the interests of workers.
PAGA reform is essential and I will work to make it happen. I will protect our businesses from frivolous lawsuits that only aim to line the pockets of private attorneys.
Grow Smarter Step 6: Audit and Repeal Cumbersome Additional Regulations
In addition to high taxes, California has come in last on Chief Executives’ Best and Worst States for Business list multiple years in a row because of its far-reaching anti-business regulations.
I will review all business-related regulations passed in the last 10 years to evaluate which are helping businesses and California. For example, I’ll review regulations on employee scheduling and telecommuting that are outdated, hard to comply with, and unnecessarily punishing businesses.
According to the California Chamber of Commerce, the Legislature has proposed 319 anti-business bills in the last 10 years. Should the Legislature continue to send anti-business bills to my desk, I will veto them.
It’s time to free California to work again.