Therefore, legislators must act with guarded optimism. Increasing competition from neighboring states and California's web of draconian regulations, continue to hamper growth and limit entrepreneurial efforts. However, by reforming burdensome regulations, the Legislature would make California more competitive with other states. Business-friendly legislators will continue to pursue initiatives aimed at making the Golden State's business environment golden once again. They will attempt to reduce taxes and regulations.
Tax rates are a primary factor in determining business location.
California's rates are among the highest in the nation, particularly in the West. Until we bring California back in line with other states, we will be the first choice for fewer and fewer companies. One such proposal is the elimination, or reduction, of the Minimum Franchise Tax. While a similar measure was defeated last year in the State Senate, business-friendly lawmakers will continue to pursue the elimination of this mandatory fee which seriously deters the formation of new businesses in California. There is perhaps no greater force that threatens the competitive edge of California's businesses than the strangling grip of over-regulation.