Elon Musk and now Oracle are coming to Texas—and that was just in one week!
Hewlett Packard, Charles Schwab, McKesson and Uber are also moving, or have moved, their headquarters from California to Texas. And Apple and Google are expanding their presence in the Lone Star State.
Oh, and formerly California-based Toyota made the switcheroo four years ago.
What’s the deal with all of these major corporations—tech, financial and even manufacturing—moving their headquarters from California to Texas? Can’t find great cowboy boots on the Left Coast? Are they looking to enjoy more 100+ degree summer days?
What you’re seeing is an economic policy race as companies vote with their feet—and Texas is winning.
No state is prouder of its high taxes, onerous regulations and heavy-handed government mandates—e.g., Governor Gavin Newsom’s banning the sale of gasoline cars by 2035—than California.
And no state is prouder of its low taxes—including no state income tax—light regulations and maximum freedom than Texas.
Former Texas Governor Rick Perry aggressively courted California companies to pack up and move to Texas. And Governor Greg Abbott has taken that effort to the next level.
But the most important factor in marketing Texas to California-based companies is maintaining the state’s business friendly climate.
Several years ago I interviewed the editor of Chief Executive magazine, which releases a yearly poll based on chief executives’ responses of the best states for doing business. The editor told me then the two constants of the poll is that Texas always comes in first as the best state to do business, and California always comes in last. And that’s still true in CE’s latest poll.
Even Texas’s reputation as a very conservative state politically, economically and socially hasn’t dissuaded many of Silicon Valley’s more liberal-leaning companies from migrating. They’re just heading to liberal Austin where they will feel a little more at home.
But the mass business exodus from California to Texas is important for more than state bragging rights—though bragging rights are important to Texans.
As president, Joe Biden will want to embrace economic policies that help the country, businesses and people recover from the economic damage imposed by the pandemic.
Lots of his advisors, along with the media, will encourage him to look to California as a model for jumpstarting the U.S. economy—and Biden may be inclined to listen. That would be a huge mistake.
Texas has already demonstrated the way to grow an economy. Just look at all the companies—whether liberal-leaning, conservative or apolitical—that have voted with their feet against California and for Texas.