It’s been a rough year for California.  Between a massive budgetary shortfall, student protests at the university  level and a continued exodus of business from the state, things haven’t  been quite as rosy as they should have.

The budget remains a mess and college  fees are rising for students, but there is hope. If state leaders are  able to wrap their minds around the idea that business leaders can be  tapped as powerful partners, rather than entities to be taxed, good  times may yet be around the corner for California.

On Tuesday, November 24, the Office of the Governor announced that $174,589,024 had been awarded  to California from the American Recovery and Reinvestment Act, courtesy  of the Department of Energy, for the purpose of fashioning energy efficient  “Smart Grid” systems.

It’s not as though private industry  has entirely abandoned the Golden State, despite the fact that lawmakers  continue to tax business and wealthy individuals, to obtain funding  for, well, everything. The Smart Grid project has attracted quite a  bit of attention, both statewide and nationally, and may be the perfect  example by which to bring business back to the state. According to the  Governor’s Office statement, the Smart Grid is notable for the way  in which it “delivers electricity from suppliers to consumers using  digital technology to save energy, reduce cost and increase reliability  and can support more renewable resources,” among other attributes.  The Governor’s Office points out that in addition to the federal funding  to governmental affiliates (including the LADWP), money was awarded  for research for such businesses as Pacific Gas & Electric in San  Francisco, Seeo Inc. and Southern California Edison in Rosemead.

According to the Tax Foundation, California’s  2010 Business Tax climate is ranked 48 out of 50; that’s pretty awful. Few will disagree that the state tax form for businesses is convoluted and ridiculous. Just try  going through all 53 pages of the “Tax Guide for Small Business,”  as offered through the IRS online. Condense the tax code for businesses  by the amount of profit. Set a minimum value, under which business are  not taxed if they make no profit, and if they earn over the minimum  value, tax at half the current rate (whether that is 8.8% or some other  seemingly random but lovely percentage, depending on the exact form  of business being taxed). State leaders can encourage increased business  investment in California by dropping tax bracket percentages for business  and by creating a much simpler tax code. This way, businesses which  are not profitable in one year, need not worry about getting through  the next year, at least tax-wise. This would encourage businesses to  stay long-term in California, and would encourage businesses nationwide  to come to the Golden State to seek true adventure and success.

Follow  the San Francisco-Hollywood model: realizing that Hollywood’s prohibitively  high taxation rates were hindering directors, San Francisco recently  began to consider ways in which to cut directors breaks and offer tax  incentives, to drive more film and television filming to the Bay Area.  To drive more businesses back to California, significant perks must  be thrown in to sweeten the deal, perhaps including guarantees of government  contracts or government-brokered private contracts, if a business reaches  successful benchmarks within two years of relocating to California.  For every successful contract completed, that business could earn additional  tax incentives or tax breaks. Each success would encourage said business  to innovate, in order to maximize profits and minimize income loss to  taxes.

There is no question that California  is an inspirational land with bountiful resources and no paucity of  willing, intelligent and talented workers. With the news this Tuesday  of the federal funding for Smart Grid and alternative energy funding,  it is clear that a drive still exists in California for innovation and  the envisioning of a better future. If the governor is truly as serious  about encouraging business in California as his commercial suggests,  then the tax code must be simplified and businesses must be given true  incentives. Sometimes it takes a show of faith, a significant gesture,  to reap the greatest rewards. It’s high time California reaped the  benefits its citizens are so capable of obtaining.