Elon Musk Is Moving His Operations From California To Texas And Taking His Hundreds Of Millions In Tax Revenue With Him
CNBC- Tesla CEO Elon Musk put his California houses on the market this year while he was sparring with state lawmakers over Covid-19 restrictions. He’s simultaneously been expanding operations in Texas and cozying up to Republican Gov. Greg Abbott.
Now, several of his close friends and associates say that Musk has told them he’s planning to move to the Lone Star State. The people with knowledge of his plans asked not to be named because their conversations were private.
Musk, the world’s second-wealthiest person behind Amazon’s Jeff Bezos, is in Texas frequently already. He spends most of his time between Austin, where Tesla and his tunnel start-up Boring Company have operations, and a coastal village called Boca Chica, home to a SpaceX facility. SpaceX started operating in Texas in 2003.
California, often condemned by the super rich for its high tax rates and stiff regulations, has seen an exodus of notable tech names during the pandemic as companies look to cut costs and prepare for a future of distributed work. Musk has been among the loudest critics this year, comparing the state to a championship sports team that’s become complacent and developed a “winning-for-too-long problem.”
In May, as businesses across California were forced to remain closed because of the pandemic, Musk tweeted that he was moving Tesla’s headquarters and future development from California to Texas and Nevada.
Well, this all escalated quickly you might think, except that it really didn't. And by hundreds of millions in tax revenue, I mean potentially billions given the trajectory Tesla is on, and Musk's options laden compensation package.
If you remember back to May, he got in this public spat on the twitter with CA Assemblywoman Lorena Gonzalez.
Keep it classy Lorena.
Pretty ballsy of a publicly elected official to take it upon herself to publicly blast a man who employs thousands, pumps billions into the state economy, and helps prop up a state almost as broke as Illinois with his business and personal tax shares.
As Brit so wonderfully stated in the subtweet (I think that's what its called), this is important because of just how much Elon Musk actually means to California's bottom line. As a business and as an individual.
It's probably not a smart business move to say fuck you to Musk since - just considering the individual state income tax - Cali received 13.5% of his $595M income in 2019, and set to be similar in 2020. (For reference, it's pretty mindblowing that his income was 4.5x the next person, Tim Cook).
Getting out of California, with the highest income tax in the country, and into Texas, which has no state income tax, could save Musk billions of dollars based on his compensation package awarded in 2018. Musk was granted 101.3 million options (adjusted after a 5-for-1 stock split this year) that vest over time as the company hits certain milestones, including market cap numbers.
Tesla’s stock has surged 782% in the past year. As of October, Musk had earned awards currently worth about $20 billion before taxes, based on Thursday’s close, a portion of the potential total.
Who knows what the actual full loss to the state would be if he moved operations to Texas. Just his equity interest in Tesla alone is estimated to be worth $18B to California revenue over time. Politicians biting the hand that feeds them is nothing new, especially in the state of California, which is the 5th largest economy on the planet despite being outrageously mismanaged for decades.
What is sure to be high comedy will be a space shot like Musk coexisting with the straight and narrow's in the Lone Star State.
Nailing down where Musk lives at any given time is a challenge because he claims to be selling all “physical possessions” and tweeted in May that he “will own no house.” Shortly after that, he put several of his California homes up for sale. CNBC was unable to find any public records that suggest he’s officially changed his residence, and the White Pages online database still lists his primary address as Los Angeles.
Even the people who know him well and are aware of his general plans to move to Texas say they don’t know where exactly he stays when he’s there and that he tries to keep those details private.
The state’s top lawmaker, Gov. Abbott, certainly seems to think Musk is making the move.
In July, Abbott said on CNBC’s “Squawk Box” that Musk told him he’d gotten a Texas driver’s license and is a “bona fide Texan now.” Abbott also said Musk was building his next Tesla factory in the state because it would give him the freedom to “expand the way he wanted to expand.”
Joe Rogan was a big score from a public relations standpoint, but TX landing Musk would be massive for the economical benefits it would bring to the table. And to see how he adapts to Texas life coming from California. It will be like the Beverly Hillibillies (fantastic show to watch on TV Land at 4am) except in reverse.
p.s.- Do the new cybertrucks come with a shotgun rack option for the tailgate? If not might want to get on that Elon. You're welcome.
h/t Jeff