Billionaire entrepreneur Elon Musk is leaving his home state of California for Texas. Musk said the “final straw” was local enforcement of COVID-19 restrictions at his Fremont manufacturing facility. However, he could also stand to save billions in potential taxes after he became the second richest man in the world earlier this year. California has the nation’s highest income tax rate while Texas went so far as passing a Constitutional amendment banning a state income tax.
The move is not entirely surprising since Musk has been launching SpaceX rockets from South Texas for years and is building a Tesla Gigafactory outside of Austin. Quality of life and relative affordability have driven many companies and residents to Texas’ large metros over the past decade. Governor Abbott regularly promotes these large corporate relocations but he has also increasingly tried to damage the public image of those same big cities as he exerts more executive power.
So, as proud Texans and proper hosts, we’d like to highlight a few lines of fine print about the Lone Star State and its regulators before the big move.
- The legislature has refused to allow the sale of Teslas in Texas. This is something that changed only because Tesla moved all its sales online. However, before that, Musk himself visited the state capitol during a protracted standoff with auto dealers over his direct to consumer business model. Then, to add injury to the insult, Tesla owners are ineligible for the state alternative-fuel vehicle incentives, “Only vehicles offered for sale or lease in Texas are eligible for this rebate grant.” California on the other hand offers thousands of dollars in rebates to electric car buyers.
- Oil and gas are still king in Texas. A GOP State Representative from the Texas Panhandle has proposed a bill to enact a $200 surcharge for registration in addition to a $200 annual registration fee for electric cars and $100 for hybrids. This same lawmaker also filed a bill to levy a penny tax for every kilowatt hour of energy generated by solar, wind, coal and nuclear power. He made an exemption for natural gas. One of Tesla’s lesser known products are its solar panels and solar roofs. Musk also plans to manufacture batteries at the new Texas Gigafactory which pair with his solar products.
- Marijuana is still illegal in Texas. Musk took flack from investors and after smoking cannabis on his buddy Joe Rogan’s show even though it was “totally legal” because they were in California. Now that both are Texas residents they should be leary of toking it up publicly in the Friendship State. Just ask Matthew McCanaughey.
- Texas has some of the highest property taxes in the US. According to SmartAsset, Texas has the 6th highest property taxes in the US with the average effective property tax rate at 1.83%, almost twice the national average of 1.08%. Musk has vowed to “own no home” in California and put up all 6 of his residences up for sale. It’s no doubt your dollar will stretch further in Texas but you’ll also pay almost 2.5 times more in property taxes on that same dollar than California’s rate of 0.77.
- Texas beat California to 1 Million cases of COVID-19. Texas may be second to California in population but we bested the Golden State in the race to 1 million cases of COVID-19. Governor Abbott shared pictures with Musk from the mansion but the state landmark remains closed to the public per the Governor’s order. Abbott hit the breaks on his opening of businesses back in June as cases spiked to an all time high. Now current hospitalizations are sitting just below the summer peak and available ICU beds are at an all time low.
Musk’s arrival to Texas is a welcomed distraction for Abbott who will likely face a primary challenge from his right flank for the exact same reason Musk left California — opposition to COVID-19 restrictions. As more California Silicon Valley types head for the Silicon Hills of Texas it will be interesting to see how their money surfaces in Texas politics. As much as GOP figures like Abbott would love to claim iconic Texas residents like Elon Musk, Joe Rogan and Matthew McCanaughey as their own, all three have each made it clear they are independent of the two major parties.
Photo: Daniel Oberhaus/ Wikimedia Commons