SACRAMENTO (CBS 13) — A growing number of tech companies are packing their bags and moving out of the Golden State. Leading names in the industry are now adding their names to the list.
“This is a major wake-up call,” explained Sanjay Varshney, Sacramento State Finance Professor.
HP Enterprise, software company Oracle and Elon Musk, founder of Tesla and SpaceX, all three big names in tech are packing for Texas.
“It has to do with taxes, clearly, because the states that have been winning recently is the states that don’t have any income tax or corporate taxes,” explained Varshney.
California’s top income tax rate is the highest in the nation at 13.3%. HP and Oracle are moving their headquarters to Texas, while Tesla sets up a new facility in the Lone Star State. The three companies made their announcements within weeks of each other toward the end of 2020.
Varshney fears more companies will follow the growing list.
“The day will come if this goes along the path that we are on right now, that we will see California not being a leader in innovation anymore and beyond the point of repair,” said Varshney.
Businessman and former Republican gubernatorial candidate John Cox believe one of the factors in efforts to recall Gov. Gavin Newsom is a lack of support for businesses.
“It’s leadership and management,” Cox said. “We need problem-solving, we need somebody who is actually going to look at the problem and say ‘Here is where we are and here is where we need to be. How do we get from A to B.'”
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Despite the moves, Dee Dee Myers, senior advisor to the governor and director of the governor’s office of business and economic development, says while companies are leaving, jobs are staying within the state.
“What is interesting about all three of those moves is they moved part of their business but did not move the jobs that were already here,” Myers explained.
According to Myers, the state is looking to improve regulations and grow tax credit programs to help build and keep innovation in the state.
“For every company that is getting a lot of attention for leaving, there are way more companies that are getting a lot less attention for staying,” she said. “We want the jobs, we want them here, we want to work with them.”