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Nevada ads target California businesses ... again

June 10, 2010 | 10:27 am

Another summer, another wave of ads from the Nevada Development Authority mocking California and trying to lure businesses from the state. Last year's ads alleged that California would be more business-friendly when pigs flew. This time around, the ads show monkeys in the forest trying to persuade small businesses to stay in the state.

"Las Vegas is driving me bananas taking business from California," says one monkey, whose mouth looks like it's been stuffed with peanut butter. "Please don't go."

The ads tout Nevada's lack of corporate or personal income taxes, calling the state the "capital of the new mega West."

For years, business leaders have alleged that California's business climate drives companies to states such as Nevada and Texas. Labor and environmental regulations make it costly to do business here, they say.

But a 2005 study by the Public Policy Institute of California raised questions about this hypothesis. Looking at business statistics from 1992 to 2002, it found the loss of businesses to other states "relatively insignificant."

"Businesses close down or scale back their operations for countless reasons," David Neumark, co-author of the study, said at the time.

After all, corporations pay relatively low property taxes in the state thanks to Prop. 13 and benefit from a large R&D tax credit.

A recent study from the Council on State Taxation found that businesses paid 40.7% of state, local and total taxes -- lower than Nevada (49.9%) and Texas (61.2%). And state and local business taxes grew 43.7% from financial year 2002 to financial year 2008 in California. In Alaska, those taxes grew 423.8%.

It raises the question: In which state do companies really "kiss their assets goodbye," as the Nevada ad teases?

-- Alana Semuels

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