Texas held the No. 1 rank for attracting California companies – which has been the case every year for 12 years, according to a report by Spectrum Location Solutions. Roughly 660 California companies moved 765 facilities out of state in 2018 and 2019.
"California companies leave because the state's business climate continues to worsen, particularly with the harsh employment, immigration and spending measures that Gov. Gavin Newsom has approved," said Joseph Vranich, the author of the study. "I foresee more exits because California politicians have a level of contempt for business that has reached epic lows."
With no state income tax or corporate income tax, Texas continues to draw businesses from overtaxed California.
Texas held the No. 1 rank for attracting California companies and was followed by Arizona, Tennessee, Colorado and Nevada.
At least 22 California counties suffered losses, with San Francisco losing the most followed by Los Angeles.
"The decline in livability is reflected in surveys that show about half of all Californians are thinking about leaving the state, a number that grows to 63 percent of millennials," Vranich said.
The report comes on the heels of Charles Schwab's announcement he is moving his San Francisco headquarters to the Dallas-Fort Worth area. Its $26 billion deal to acquire TD Ameritrade is expected to be completed in 2020 and take an estimated 12 to 36 months to fully integrate both firms.
Schwab's new Dallas-Fort Worth campus will cost about $100 million and cover 70 acres with 500,000 square feet of office space.
The Wall Street Journal explains the difference between doing business in California and Texas.
"The Lone Star State imposes a 0.75% franchise tax on business margins (total revenue minus compensation), which is substantially less than the corporate tax rates in California (8.84%) and Nebraska (7.81%), where TD Ameritrade is currently headquartered," the Wall Street Journal reported."The city of San Francisco also imposes a 0.38% payroll tax and a 0.6% gross receipts tax on financial service companies."
"Texas has no individual income tax, while the top rate on income and capital gains in California is 13.3%, and the Lone Star State's housing and energy costs are substantially lower," the Journal adds."The average monthly rent in San Francisco is $3,870 compared to $1,200 in Dallas. Schwab workers and executives can have a higher standard of living, and more after-tax income, at the same salaries."
Earlier this year, Core-Mark became the 23rd Fortune 500 company to move its corporate headquarters to the Dallas-Fort Worth region. Moving from San Francisco, the company said Dallas offers more favorable operating costs, lower taxes and a central location for Core-Mark’s nationwide business.
The Dallas-Fort Worth region has the third highest number of Fortune 500 headquarters in the U.S., behind New York City and Chicago.
One of them, Toyota Motor North America, relocated its Torrance, California headquarters and 3,000 jobs to Plano in 2017. Toyota also selected San Antonio over nine other U.S. plants this fall to invest $391 million in expanding its assembly plant.
According to new data from the Bureau of Labor Statistics, two Texas metro areas reported the largest over-the-year employment increases by number of jobs and percentage in October 2019: Dallas-Fort Worth-Arlington (98,700 jobs) and San Antonio-New Braunfels (3.4 percent).
In total, Texas is home to 49 Fortune 500 companies including ExxonMobil, AT&T, Sysco and American Airlines, and more than 1,400 foreign companies including Toyota, BAE Systems, Siemens and Shell Oil and 2.4 million small businesses, according to the Texas Economic Development Corporation. Texas also has the second largest civilian workforce in America, totaling 14 million people.