Following in the steps of Joe Rogan, Elon Musk is moving from California to Texas. Rumors about the move have circulated for a little while, and Musk confirmed them at the Wall Street Journal CEO Summit on Tuesday (video above).
Musk said that Tesla is the last car company still manufacturing cars in California and that SpaceX is the last aerospace company doing significant business in the state. “There used to be a dozen car plants in California, and California used to be the center of aerospace manufacturing.”
SpaceX’s Starship development is in Texas, and there is a big Tesla factory outside of Austin.
“There are a lot of things about California that are great,” Musk said. “Obviously, it’s the biggest economy in the country, the most number of people. I do think that there is something that happens when — to use a sports team analogy — if a team has been winning for too long, they do tend to get a little complacent, a little entitled. And then they don’t win the championship anymore. California’s been winning for a long time. I think they’re taking it for granted a little bit.”
Another thing that is notable here is that, as Tesla stock has skyrocketed — it’s multiplied over 8x in the past year — Musk has become the second richest person in the world behind Jeff Bezos. He is worth $157 billion, according to the Bloomberg Billionaires Index. California has a state income tax of 13.3 percent, and Texas does not have one. That would be considerable capital gains savings if he is able to successfully avoid them in the move. (Fox Business notes that the California Franchise Tax Board is known for their “relentless pursuit” across state lines.)
Beyond the taxes are the regulations. In May, Musk reopened the Tesla factory in California, despite state regulations, and had this Twitter exchange with a California assemblywoman:
— Elon Musk (@elonmusk) May 11, 2020
It feels like this year will wind up accelerating the shift of wealthy individuals and the companies they operate from high tax/regulation states to low ones. The long-term impact of that shift will be very fascinating to observe.