Companies Leave California Due to High Taxes and Regulations
California’s high tax burden and the cost of living are impacting companies and individuals. As a result, they are leaving the Golden State for greener pastures.
May 27 2021, Published 3:10 p.m. ET
Companies are leaving California in droves and they all seem to be heading to Texas. Why are companies leaving California? Why is Texas a good state for relocating?
California’s high tax burden and the cost of living are impacting companies and individuals. As a result, they are leaving the Golden State for greener pastures, according to the California Policy Center.
In its California Book of Exoduses, the Policy Center lists over 100 large and small companies, celebrities, and entrepreneurs who have left or plan to leave the state since 2014. Most of the departures have been within the last few years.
Snowflake is disbanding its California corporate headquarters.
Cloud data analytics company Snowflake is the latest company to announce that it’s leaving California. While some operations will remain in Silicon Valley, the company disbanded its corporate headquarters and opened a principal executive office in Bozeman, Mont.
“We are a Delaware corporation with a globally distributed workforce and no corporate headquarters. Under the Securities and Exchange Commission’s rules, we are required to designate a ‘principal executive office.’ For purposes of this report, we have designated our office in Bozeman, Montana as our principal executive office, as that is where our Chief Executive Officer and Chief Financial Officer are based,” the company said in a recent SEC filing.
Other recent companies to announce their exodus include injection molding manufacturer Nissei America, financial tech services company PayCertify, and bank First Foundation, Inc. Two of the companies will be moving to Texas.
Over half of the companies included on the California Book of Exoduses plan to call Texas home, including Tesla founder Elon Musk.
Elon Musk moved to Texas last year.
Musk announced that he was personally moving to Texas, but it wasn't clear if the world’s richest man would also move Tesla to the Lone Star State. Reports said that he threatened to close the company’s Fremont, Calif. factory after clashing with state regulators. In February, the company filed for permits to expand the plant, The Los Angeles Times reported.
In a December 2020 interview with CNBC, Musk pointed out that Tesla is the last car company still manufacturing cars in California. Musk’s SpaceX is also one of the last aerospace companies still manufacturing in the state, he said.
“There used to be over a dozen car plants in California. And California used to be the center of aerospace manufacturing! My companies are the last two left...That’s a very important point to make,” he told CNBC.
Why companies are moving to Texas
They say everything’s bigger in Texas, that is, except for the taxes. Lower taxes are one reason companies like Oracle, Hewlett Packard, and Charles Schwab are relocating to the Lone Star State. Other reasons businesses love Texas include fewer regulations and lower housing costs for employees.
Austin and Dallas appear to be the main hotspots for business relocation. In 2020, Austin set a record for the number of jobs brought to the city through corporate relocations, reported The Austin Business Journal.
Population shifts from California to Texas.
The population of Texas is growing too. In 2020, the state added more residents than any other state, according to U.S. Census Bureau data.
California saw its population decline in 2020 for the first time since 1900. According to Census data, about 70,000 residents left the state last year.