Cal I Forn Ia, We Won't Leave Whoops!

Business-bashing in California is suddenly very passe. Long known for its regulatory zeal, the state recently streamlined its process for issuing environmental permits. It also adopted changes that will cut business taxes by about $500 million a year--including a 6% tax credit for new investments and elimination of the 5% sales tax for startups. The state has also revamped its workers' compensation laws.

But will all this improve the once-golden state's luster? The investment-tax-credit changes alone could boost spending by about $8.8 billion over 10 years--enough to offset the estimated 500,000 jobs the state has lost in recent years. And Governor Pete Wilson recently basked in testimonials from some Hughes Aircraft execs, who said they've decided not to flee, thanks to the new attitude. Great news! Except that Hughes has already moved much of its manufacturing to Tucson.

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