California is following the footsteps of Detroit, once darling of the Roaring 20s and the home of the auto-mobile. The 1929 stock market boom was fuelled by airlines and auto-mobiles. In the wake of the 1931 Sovereign Debt Crisis, Detroit defaulted on it payments in 1934.
The Golden State was beholden to a red hot real-estate after the dot-com bubble which shone the light on Silicon Valley. Now both have disappeared into the night. In 2009 - 2009, the State had a near death experience with a budget shortfall of $11 billion. On April, 2009, the State instituted a temporary increase in sales and use tax.
Investors and entrepreneurs cannot plan their ventures if the taxation of the domicile municipality, province,city or nation is changed arbitrarily. Business plans are set out with a forward looking taxation rate and the assumption is that it will remain constant for the ensuing 5 - 10 years (small and medium companies) and 10 - 25 year (multi-nationals). Inconsistent tax policy is a red-flag. Jaded entrepreneurs and investors are now looking at Texas.
"Can a people tax themselves into prosperity? Can a man stand in a bucket and lift himself up by the handle?" - Winston Churchill
When the creators of wealth are driven out of town, who will the government tax? You guessed it, the middle class.
"FORTUNE -- Entrepreneurs and investors in California can expect to receive a rude shock in the mail if they sold their company in the last four years. Not only did the state's Franchise Tax Board (FTB) eliminate a tax break on capital gains for small business owners and investors, it announced the tax would be reinstated retroactively. This means those who benefitted from the break can expect a bill for unpaid taxes, plus interest, stretching all the way back to 2008...."
http://tech.fortune.cnn....errifies-tech/?iid=HP_LN