Emigration out of California Continues: Elon Musk Moves it ALL to Texas

Elon Musk announces signing of AB1955 into law as “last straw”, and commits to pulling remaining corporate headquarters out of California.

July 22,2024

By: Bobby Casey, Managing Director GWP

Milton Friedman once said, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” He didn’t coin this observation, but the earliest account was in 1971 when Gavin Newsom was about three years old. They didn’t have him in mind when they said it, perhaps, but they were speaking of his sort.

There is a lot of talk of California Governor, Gavin Newsom, being the new, young face of the Democratic Party. He’s got well coiffed hair, he’s debonair, he’s silver tongued, and he has the distinction of being the chief executive of the largest economy in the United States and fifth-largest economy in the world.

It’s an impressive resume on the surface. He won his second term in 2022 and survived a recall vote in 2021.

His election pockets are filled with a strong backing from the Democratic Party and his election sails carry him to victory largely on ideology. There’s no real merit to the man. He’s not really accomplished anything of great value to the state, although his tenure is absolutely significant to California’s standing and history.

There’s a growing list of failures beyond that of the light rail system that people are angry about. Understand that while Newsom won his second term, he won with 59% of the vote. Which means 41% of California voters did not vote for him. 41% of the California electorate do not want what he’s selling.

They have a border issue, rising crime, rising homelessness, and unaffordable cost of living. And those are just the day-to-day problems. That doesn’t include the boondoggles we’ve written about such as their lite-rail failure, or the fact that more insurance companies are not offering policies in that state.

These are the most recent announcements:

These are political failures, not corporate ones.

This leads to the larger California failure, which is both conspicuous and precipitous: the exodus of businesses emigrating out of California. The Hoover Institute observes:

In 2021, California business headquarters left the state at twice their rate in both 2020 and 2019, and at three times their rate in 2018. In the last three years, California lost eleven Fortune 1000 companies, whose exits negatively affect California’s economy today. But California also is risking its economic future as much smaller but rapidly growing unique businesses are leaving, taking their innovative ideas with them.

Center Square further reports the majority of businesses leaving California are choosing Texas as their new home. This isn’t surprising considering the more affordable real estate, and noticeably lower tax and regulation regimes. For the first time, California saw a net decrease in population in 2020.

After the 2020 Census, with Texas gaining more residents, it also gained two congressional seats. After losing residents, California lost one congressional seat… A projection of a 2030 Census count has California losing an additional four congressional seats and Texas gaining four more.

Elon Musk pulled the Tesla Headquarters out of California and moved it to Texas in 2021 when he was ordered to stop production due to the pandemic.

Today, Musk is now saying he is moving the remainder of his corporate headquarters, social platform X and Space X, from California to Texas; this time due to a recent bill passed by Newsom called the SAFETY Act or AB 1955. From the Free Press, the law:

“… legally forbids schools from adopting any policy that would force them to disclose “any information related to a pupil’s sexual orientation, gender identity, or gender expression to any other person without the pupil’s consent.” Schools may not, as a matter of policy, inform parents of a child’s new gender identity unless the child volunteers her approval. The law also prohibits schools from punishing any school employee found to have “supported a pupil” hurtling down a path toward risky and irreversible hormones and surgeries.”

Live by the cancel culture, die by the cancel culture.

When Twitter was owned by Jack Dorsey, and people like Dr. Jay Bhattacharya and others who questioned the COVID narrative were blocked from the platform, it was argued that it was a private company and it had a right to refuse service on whatever grounds it wished.

Fair enough.

Out come the Twitter Files, which clearly demonstrated that these decisions were initiated by the federal government.

Elon is a private individual and his corporations are privately held as well. As such, he can choose to cancel who he wishes. And he’s chosen to cancel California on similarly subjective grounds.

Regardless of where you stand on the issue, it was certainly not a economically favorable decision for Newsom to meddle in social affairs to this degree. And so the legacy of Gavin Newsom continues down the predictable path of big losses:

San Francisco’s downtown has been attempting to reverse urban blight for nearly 15 years. X, formerly Twitter, previously benefited from a tax break enacted in 2011 meant to attract companies to the Mid-Market area of San Francisco, which has long struggled economically. The law was sunsetted in 2019, and the X headquarters’ departure could represent yet another blow to the area – where 46% of offices and 40% of retail spaces are vacant. Other companies that have left or downsized their offices in San Francisco since 2021 include Meta, Salesforce, Snap, Lyft, Block, Airbnb and Paypal.

Newsom along with all the other NPC punditry are touting the myriad subsidies from which Musk and his companies benefited.

Okay… BUT…

These are industry-wide subsidies. They aren’t Tesla specific subsidies. They are state Electric Vehicle incentives which ANY maker of EV could partake. So the Toyota Prius is also a beneficiary. Ford Pro EV is a beneficiary. This isn’t a Musk-specific initiative.

The worst part is that the tax credits California gave only sound benevolent when contrasted to the standard taxes of California. Those same tax credits aren’t even needed in Texas because the taxes themselves don’t exist!

Essentially, California is saying, “I could’ve robbed you more, but didn’t. And you’re an ungrateful wretch for leaving.”

The idea that the government “allowing me” to keep my own money and calling that a “subsidy” is a level of hubris and audacity that absolutely warrants leaving.