For as long as anyone can remember, California has been one of the most desirable places on earth. Its majestic redwoods, world-class education system, sandy beaches, beautiful people, and global food scene have cemented its status as a proven mecca for big bucks and talent. But all that seems to be changing.
An exodus of tech firms has recently made the decision to pick up sticks out of the golden state and build their homes in a very different corner of the United States. So today we're tackling the burning question of why California businesses are moving to Texas?
Internal migration trends like this one are always complicated, but it's worth noting that this Texan exodus has really picked up steam this year as some very high profile people and companies have made their way into the Lone Star state.
Elon Musk Announced in July, that the construction of the largest US auto plant to date would be on the outskirts of Austin, Texas. The equivalent of a $ 1.1 billion investment in the region, and creation of around 5,000 highly qualified jobs is no small matter.
What's more, Elon Musk's personal residence is now in Texas and a new base for his drilling operation, The Boring Company, just established in Flugerville.
Elon Musk's Relocation to Texas lets him to be closer to his beloved Spacex base in Boca Chica South Texas, where Musk's Starship rockets are currently in development, getting ready for a future mission to Mars.
All those aside, there are also other significant push factors actively driving Musk out of California. In May, Musk had a very public bust up with California official Lorena Gonzalez after his Fremont, California Tesla factory was forced to close as part of the state's efforts to combat the spread of Coronavirus.
Musk was angry at the order to close and posted a tweet stating that his company would immediately file a lawsuit against Alameda County.
But it is not just a hot-headed upstart who recently left the California. Hewlett-Packard enterprise is also making traces towards Texas.The firm, considered by many as the great-grandfather of Silicon Valley technology giants, is building a state-of-the-art campus on the outskirts of Houston. A statement from Hewlett-Packard Enterprise suggested the reasons for this move, which said:
"Houston is an attractive market for recruiting and retaining future diverse talent."
Similarly, database software giant, Oracle, has just announced that it will relocate its headquarters to Austin, Texas because as a spokesperson put it:
"We believe these moves best position oracle for growth and provide our personnel with more flexibility about where and how they work."
So what makes Texas more attractive from a staffing point of view?
The corporate tax situation is not that different between the two states, although President Donald Trump's controversial slashing of the federal corporate tax rate from 35 percent to 21 percent in 2017 made State taxes definitely more of a priority for companies looking to cut costs.
Experts believe that this in itself is not enough to encourage a wholesale move. However, the tax situation for individual employees is very different. California income taxes for high earners are indeed very different, 13.3 percent tax and income rates are rather more competitive at zero percent, meaning that an executive moving from California to Texas will enjoy a significant instant wage increase and can do a lot more with that money.
Even culturally Texas is not unlike California. Although Texas is known to be conservative and defiantly red in its outlook, Places like Austin, with its healthy 47% rate of skilled workers, and hip cultural events like the annual South-by-South-West Festival, are increasingly giving Texas a run for its money.
However, the big, well-established California Stars like Google, Facebook and Apple with its shiny new $4 billion headquarters, are going nowhere for now, and it seems the Cali tech dream won't be going up in smoke anytime soon.