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State Ranks Near Bottom on Small-Business Climate

Report: High taxes make California unattractive, advocacy group says. Nevada tops the list.


California ranks among the worst states in the nation for small business, while neighboring Nevada boasts the nation's best climate for entrepreneurs, according to a report by the Washington-based Small Business Survival Committee.

California's low ranking of 44th overall stemmed from its tax structure. The state is tied for the nation's highest top capital gains tax rate, and its gasoline and personal income taxes are among the highest in the nation, the report said.

The Small Business Survival Index ranked the 50 states and the District of Columbia on 17 "government-imposed or government-related" costs affecting small business and entrepreneurs. States with low or no taxes on capital gains, personal income or corporate earnings scored near the top.

Darrell McKigney, president of the committee, a nonprofit small-business advocacy group that released its sixth annual survival index, said business friendliness was one reason Nevada is one of the fastest-growing states in the nation.

"California is a victim of its own successes," McKigney said, adding that businesses that once were attracted here may now be setting their sights on other states.

"If you don't do something on the small-business front, you'll have the same supply-and-demand problem with jobs that you have with electricity, where a lot of people have moved there but don't have a place to work," McKigney said.

Norman Williams, a spokesman for the California Technology, Trade and Commerce Agency, said the state offers an array of advantages to employers--such as access to high technology and ports, as well as a quality work force.

"All of those [higher taxes cited in the report] are not factors that would make a business move or decide where to locate," Williams said.

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