Tech companies and titans are leaving California for Texas. Does it matter?
“I think it’s important for us to distinguish between the leaders of these companies leaving the state and the employees and offices,” Turner said, noting that Oracle’s Elon Musk and Larry Ellison, who are both among the richest people in the world, have done very well in California, and are now moving to places with lower income taxes.
There is no doubt that California is disproportionately dependent on the richest 1%.
“Just 1% is responsible for generating over 45% of all personal income tax revenue,” said HD Palmer, spokesperson for the California Department of Finance, noting that it “comes from things like capital gains and stock options and other sources of income that depend on the stock market.
People like Ellison, the fifth richest person in the world according to Forbes, understandably dislike California’s progressive tax structure. But as the recent initial public offerings of Airbnb and DoorDash spectacle, the State will always benefit from dynamic companies which settle there.
“There will always be activity that will be generated by companies that go public, it’s like earthquake activity in California,” Palmer said.
Palmer also said it’s very difficult to assess the overall impact that leaving large companies like Oracle and HP will have on California’s bottom line. But he says that by no means tells the whole story.
“The flip side is that we are seeing businesses and entities in California that continue to grow, continue to hire, continue to develop, continue to go public and generate income as well,” said Palmer. Still, he says, “We want to keep as many of these people here as possible and continue to create the environment where we can see more of these types of activity.”
In addition to taxes, some companies are yelling at laws like Assembly Bill 5, aimed at companies like Lyft and Uber, as well as a recent signed by Governor Gavin Newsom demanding specific levels of diversity on boards of directors.