The totals now: Texas has 53 HQs, New York 51, and California 50. New York maintains the advantage of New York City still being the world center for finance, and California long has had Silicon Valley. But Texas has only a welcoming business climate with low taxes and regulations, beginning with a 0 percent state income tax rate.
To be fair, in recent years California and New York have competed for first place on the list. But this is the first time that Texas has catapulted to the top.
“Texas is the economic engine of the nation, and I am proud to announce that we continue leading the country now with the most Fortune 500 corporate headquarters,” Texas Gov. Greg Abbott said. “Thanks to our unmatched business environment, with no corporate or personal income taxes, a highly skilled and diverse workforce, easy access to global markets, and reasonable regulatory climate, Texas has more businesses relocating and expanding here in our state than ever before.”
I know several people who have made the move from California to Texas and love it—despite the much worse climate. For the wealthy, the lack of a state income tax is especially enticing. I’ve talked to rich people, and here’s how they think.
The top federal income tax rate is 37 percent. So the wealthy, after paying that, keep 63 percent of their income. In Texas, that’s the end of it.
But in California, for incomes of more than $1 million, the tax rate is an additional 13.3 percent. Now, 13.3 of 63 comes to 21.1 percent. So that’s the real income tax rate for the wealthy: 21.1 percent.
Or add the two together: 37 percent plus 13.3 percent comes to 50.3 percent. That means half your wealth is taken away just by living in California.
Another aspect is that wealthy people run companies, which need good employees. California is a ludicrously expensive place to live because of sky-high land prices now higher than $1 million for a small house along the coast and a high 9.3 percent state income tax rate paid just by the middle class. That means it takes at least a family income of about $175,000 per year just to join the middle class.
There’s one area of California that’s going gangbusters: government budgets. They’re so overflowing with tax dollars that the state enjoys a $97.5 billion “surplus,” which it’s trying to spend like Richard Pryor in “Brewster’s Millions.”
The website of Gray—who, let me emphasize, is a Democrat—reads, “The new proposal, which comes as other legislative efforts appear to have stalled, would fully suspend the 51.1 cent excise tax on each gallon of gas for 12 months, while backfilling funding for transportation projects using the state’s multibillion-dollar General Fund surplus. Previous proposals were criticized for allowing oil companies to pocket the tax savings without guaranteeing lower gas prices for consumers.”
Perhaps the legislature will pass some version of AB 2547 at a later date, as even more California corporations and citizens head to greener—and cheaper—pastures in other states.
