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Better for business: Cali. or Texas?

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JEREMY HOBSON: A delegation of California lawmakers is in Texas today looking into why California has shed jobs over the last three years -- while Texas has created them.

From Austin, Ben Philpott reports.

It's a challenge Texas Governor Rick Perry often makes -- leave what he calls "high tax" California and come to "low tax" Texas. So California Assemblyman Dan Logue brought a bi-partisan group of lawmakers to ask some recent defectors why they made the move and what would bring them back.

DAN LOGUE: We're here to talk about primarily jobs. If you don't grow the economy, everything else doesn't matter.

But are taxes really lower in the Texas than the Golden State? A report by the Council on State Taxation, a D.C. based tax research group, showed Texas businesses actually have a higher tax burden. But the report takes into account California's artificially suppressed property taxes thanks to the 1970's ballot initiative -- Prop 13. Doug Lindholm heads up the group.

DOUG LINDHOLM: So if you look at private sector product - the burden in Texas is higher. But again that's attributable to the fact that California has a lower property tax rate on both businesses and individual. Unless of course you sell that property.

Once you sell a property -- it no longer falls under Prop 13's tax protection. So Lindholm says leaving California probably wouldn't help established businesses. But in most cases startups would be better off in the Lone Star State than in California.

In Austin I'm Ben Philpott for Marketplace.


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