"To be clear we will be continuing to expand our activities in California," Musk said. "Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory it's jammed."
But, he added, "It's tough for people to afford houses, and people have to come in from far away....There's a limit to how big you can scale in the Bay Area."
https://www.msn.com/en-us/money/companies/tesla-moves-headqu...
Austin: https://www.redfin.com/zipcode/78725/housing-market
Fremont: https://www.redfin.com/zipcode/94538/housing-market
I mean, look at this: https://www.redfin.com/CA/Palo-Alto/3785-Park-Blvd-94306/hom...
I think Austin is better about building too, meanwhile in the Bay Area they just rejected units desperately needed in the tenderloin because they might become a "tech dorm".
In addition, a large part of Texas is privately owned and counties are much more relaxed about land use. This means high land availability for new housing. This will reduce the price increases from demand increases.
I'll simply state that I would never consider working for Tesla before, but now I would be open to it.
Travis County is pricey but it isn't too long of a drive to get to pretty cheap real estate.
The shuttles had Wi-Fi, so they could get all their regular work done while on the shuttle. That was functionally their office, even though they had a desk in the building on Bubb Road.
And they were getting paid well over $150k, and living in group homes east of San Jose, because that’s all they could afford to live in.
I loved Austin, and lived there twice, but you can stick a fork in it now. Maybe in 20 years when they’ve finished the I-35 reimagining.
Miami? Or joining the much more quiet Jacksonville or Tampa Bay exodus that this dubious survey based entirely on LinkedIn data claims:
https://www.bloomberg.com/news/articles/2021-06-01/austin-is...
Citation needed for this property value claim, also for the existence of “locked down” blue states. I haven’t seen a lockdown yet like many other places.
https://www.theverge.com/2020/7/14/21323977/austin-tesla-tax...
Because $300k houses are still pretty darned expensive when you're not making SV salaries.
It may not be the real reason (which probably has more to do with his feelings about California in general and maybe proximity to SpaceX's Texas facilities), but it's the official reason.
https://mobile.twitter.com/unusual_whales/status/14462517624...
Who knows. But the biggest fundamental problem for California here honestly is geography: Boca Chica is the best single land based potential BEO spaceport in the continental US, simple as that. That's why SpaceX is there. As close to the equator as they can get, with a lot of water in front of most of the launch paths they want, and no urban buildup there. For the small percentage of polar orbits they'll want to do there will remain Vandenberg, or eventually converted oil rigs for sea launch, but the vast majority of SpaceX's cadence for the foreseeable future will be Starship going to more standard orbits where the bulk of Starlink will exist or eventually beyond Earth's orbit for trips to Mars.
Sure taxes and all the typical rigamarole that typically comes up in these discussions might have weighed a little one way or another, and in the vast majority of CEO/HQ moves weigh quite a bit. But to the extent that SpaceX is the biggest guiding unified dream of Elon Musk, and given the constraints of logistics, economics and the physics of orbital launch, it basically had to be there. Which means he has to be there. Which means it's a lot easier even for someone with a private jet if the HQ of his other big enterprise is around 300mi away nearly due north in the same TZ vs ~1650mi west.
If for some reason the jobs situation and housing was just perfectly impossible in Texas maybe he would have sucked it up but even then I doubt it given his (and Tesla's) resources. At the end of the day like everyone else he can't buy more than 24 hours in a day. He can buy more efficient use of them.
The simplest reason for moving is avoiding billions of dollars in California state income taxes.
https://www.houstonchronicle.com/business/article/Elon-Musk-...
They have big expansion plans and most of that is outside of California. So, I'd say this is a good move for them. They no longer need the Bay Area investors. That was always the main reason for being there. It was critical to them just a few years ago when they were struggling to survive. But they turned a corner and are now very profitable so they can cut loose from that safely.
Tesla is now a multinational and while California is still an important market for it, they have bigger markets that they are thinking about now where they are starting to operate huge factories as well. Fremont went from being the largest Tesla factory to being one of the older and smaller ones in a few years.
It's also funny that Tesla still can't sell their cars directly to customers in Texas.
It's theater. Petty, obstinate, twattish theater.
It depends on the company.
In the case of Tesla, at first it will probably be a lot like Boeing, which hardly anyone in the general public realizes is headquartered in Chicago and not Seattle.
> Musk continued on to say they will still be expanding activities in California, but they want to do that in Texas too.
> “This isn’t a matter of Tesla leaving California, our intention is to actually increase output,” he explained.
1. https://www.kxan.com/news/business/elon-musk-announces-tesla...
[1] https://www.architecturaldigest.com/story/elon-musk-lives-pr...
[2] https://www.teslarati.com/tesla-megapack-lathrop-megafactory...
https://www.businessinsider.com/elon-musk-takes-last-remaini...
You look at the skyline from when Dell was founded, and look at the skyline today. It's been non-stop residential housing development, and it's only accelerating. The current squeeze is sizable, yes, but the market forces are working.
I'm not normally someone who picks on phrasing, but this one is a little orwellian. The implication is that, while homelessness is endemic basically everywhere, the proper "rules" for them to obey are that they are not to be seen. And enforcement regimes that allow them to exist in public are "lax"?
Yikes.
Lots of low/middle income Californians actually have a higher total tax burden in Texas.[1] And I’d guess that Austin is one of the places where cost of living is highest for Texas, reducing the net quality of life profit.
Also, residential expansion in those two places is a bit of apples and oranges. Bay Area is surrounded by water, mountains, and Open Space Preserve. Austin is surrounded by land, land, and more land; and most of it is flat.
[1] https://www.bloomberg.com/opinion/articles/2021-05-19/wait-c...
Austin has crazy property taxes in comparison to CA, which is where they get you.
2.5% tax rate evaluated for the property prices annually, so retiring on a fixed income in Austin is a tiny bit harder than in CA (that's the real goal of Prop 13).
Income taxes are easier to think about, because it goes to zero when your income drops, but property taxes based on the unrealized value of the house is completely out of your control.
The homestead exemption does apply, but Prop 13 is by far the superior option for an owner, though what Austin does is better for the government's fiscal policy.
I don't agree with your assertion that homelessness isn't caused in part by house prices. That seems unintuitive to me. Yes some people will get roommates, but what about people that already had roommates and were barely meeting rent? Some of them will have the foresight to get up and move interstate before they get wiped out, but there's frictions and costs associated and not everyone will succeed.
Of course that message actually means our European visitors aren't that important to us.
> This site is currently unavailable to visitors from the European Economic Area while we work to ensure your data is protected in accordance with applicable EU laws.
OT: I thought that I would not see this in mid-2021.
The reason we pay close to 50% in California is that people are paid much much much more here. This is a problem you want to have.
ref: https://wallethub.com/edu/states-with-highest-lowest-tax-bur...
The Palo Alto/Los Altos/West Menlo Park areas have fought hard to prevent housing development (NIMBY!). Recently a small number of luxury homes were built in the Barron Park part of Palo Alto. The homes sold quickly for $4.5M and up. Meanwhile, on the same small street in Barron Park, there are currently five homeless people living out of their cars and three trailer homes. They use the adjacent park's open public bathroom.
I don't think the departure of Tesla HQ will have much of an impact on the town, which is a shame. Something bad is festering beneath the pristine surface here.
California is saturated, it's nice to distribute things amongst the states more evenly. There's already so many people and high value tech companies in California.
I don't think California has given Elon any significant subsidies. When Tesla asked states to compete on the Gigafactory, California lost to Nevada.
to move towards a sustainable future, he's moving on to Texas. Hell of a great use of subsidies.
But then they'd have to make cars that understand ice and snow, and autopilot is much easier to sell if they can pretend freezing weather doesn't exist....
High earners pay an effective tax rate of > 50%. They are partially picking up the slack from Prop 13, which artificially distorts the housing market by allowing longtime homeowners to pay property taxes based on decades-old assessed values while sitting on millions in equity gains.
So young, high earners see the state taking a massive chunk of their paycheck in exchange for middling infrastructure and pitiful public schools while simultaneously putting its finger on the scale of a wildly inflated housing market.
The exodus will only pick up steam unless policymakers get their act together.
Earn above average salary and enjoy good weather, politics, and outdoors.
Earn a median salary and enjoy okay weather and lower taxes.
By More fair, I mean, CA has a similar tax rate across incomes, but does place more burden on top earners than TX does.
TX on the other hand, is unfairly taxing people more at lower incomes, and less for people at higher incomes.
TX policies don't align with my moral beliefs–I would not decide to raise my children there given the way the state is governed. That's of course a personal opinion, but I don't want to spend the rest of my life fighting for rights that we have in CA.
I used to live in California. There is no better state than California. If house price falls, I would buy another house in California.
Musk has not paid any tax because he hasn't cashed out any of his stock options yet. Some of his options will expire next year so he will pay tax then, but I am sure California will get the lion share of the tax revenue (as Musk lived in California up to 2021.)
Capital gains is taxed on the residence at time of sale, not time of purchase. So if Musk sells when he’s not a resident of CA, he won’t pay CA taxes.
CA also has some fairly unique (and IMO unfortunate) tax rules where they will still require you to pay taxes on some things even after you've moved out of state. I believe option exercise (for options granted+vested while living in CA) is one of those.
Is that incorrect?
IMHO the high income tax regime found in California is actually a function of high density, high income, knowledge based earners moving in.
If enough of them arrive, demands for services (schools, fire, police) and infrastructure (i.e. light rail, etc.) will increase. The original NIMBY locals will initially love the increasing property values and new restaurants... until their property tax bills start rising to astronomical sums.
The state will then need to push for Prop 13 like property tax capping legislation at which point the state legislature will need to raise funds somehow and magically they will end up with a 10%-20% state income tax on super high income earners like Elon, et. al.
That said - just a IMHO prediction and just saying that you can't blame it entirely on just California(ns) being dysfunctional. :)
[1] https://www.youtube.com/watch?v=AbXLnmLEevQ
Property tax values in Austin just saw the highest increase in Austin History
Just compare the building/facilities of any top bay area public school with that of Texas. The former look like shack while the latter look like mini universities. Bay area schools still rank higher because of students and parents, its nothing to do with the state.
The high taxes of CA are due to the state sector having taken over the political system, via control over the dominant narrative/ideology.
To give just one example, emergency workers can retire at 55 with 90% of their pension, that averages $108,000 per year.
California now has $1 trillion in pension obligations for its unionized public sector workers.
Have you seen where the money goes? It ain’t supporting a “technology infrastructure”.
How so? I put a salary of $300k in SF here, and came up with 38%: https://smartasset.com/taxes/california-tax-calculator#c0piT.... Obviously Fremont workers do not need to live in SF.
Honestly, coming from a third world country where I got taxed more and having had to work in Austin and Atlanta before on previous jobs, taxes are the least of my complains for California. Yeah they should fix property taxes... but my main complaint is that even though all politicians like speaking a mouthful about helping the poor and how broken healthcare is, every single government program that's supposed to help the mentally ill is utterly and completely broken beyond belief. And I'm saying this coming from Argentina that as a country has around the same population and way less GDP.
Literally the only thing about California that doesn't feel "first wordly" as all the nice places in Europe I've been to is how it deals with people that need mental health or that have housing issues. I tried discussing this with every other politician I meet or something but besides condescending smiles because of the perceived trauma they think growing up in Latin America caused (it didn't) I never get any iota of acknowledgement that something in the world is wrong. Except for the Republicans, which is the only problem in the US, apparently.
Not a lot of people hitting that regularly, but I imagine it can sting a little if you've got a more proletarian salary normally and are hitting that region just once because of say, a start up liquidity windfall
https://washingtonstatewire.com/am-i-taxed-too-much-a-compar...
It’s often seemed like people in California would prefer that a manufacturing operations operate in Asia and come through their ports rather than operate in the middle/south US.
You're making the same conservative argument about wages: if you pay a living wage companies will flee. No, if a company can't pay a living wage, it shouldn't exist. Likewise, if a company can't manufacture products without destroying the environment, it shouldn't manufacture those products.
I'm just a conservative. A nature conservative.
The SALT deduction wasn't repealed (for which a coherent argument could be made, though it would still be a bad idea), it was capped (for which there isn't even a principled argument.)
> High earners pay an effective tax rate of > 50%.
“High earners pay high rates” isn't exactly a sign of a backward tax regime.
Compared to what?
Edit: Not sure why everyone is assuming I'm saying Texas is somehow better. I'm well aware of the power grid problems there as well. The question was "in comparison to what" and setting aside CA and TX, at last count there are 48 whole other states in the nation.
[1] https://www.sfgate.com/local/article/California-exodus-is-ju...
Zero growth isn't the right baseline. The fact that the population hasn't boomed means something is definitely wrong.
Washington state is a good alternative. It has all of California’s grievance politics and collectivism but with none of the tax burden.
California's housing issues are complex and not likely to be remedied quickly. This sounds like a completely reasonable plan at first glance.
Do they just "raise the anchor" and move with the company (if they do actually physically relocate, which does not seem to be really the case in this instance) ?
Maybe that's normal in the US but the though of having to leave your friends, parts of family family, house/flat and familiar environment in general because your company decided to relocate somewhere else is frightening! Of maybe that's just my central-European perspective.
In this particular case, not much. They are expanding their factory in California. They are not moving all their operations.
This kind of sedentary thinking is one of the many reasons why there aren't any Tesla-like companies in Europe.
So far I have Joe Rogan with his spotify deal and now Musk with some of his options coming up for payday.
https://www.newsweek.com/joe-rogan-moving-texas-87-million-t...
If you really think of it - one of the main reasons Musk started in CA was because thats where his client base was to get the homegrown advantages for clientbase, talent and green benefits/cred. Now since his base has moved globally, he is moving to the lowest cost of operations (read: Texas). And to be fair - it would be very difficult to upsize any of his manufacturing capabilities in the bay area. The fact that he even has a major facility there is kind of impressive.
1. The $200-500k Federal tax bracket actually went up;
2. Loss of the SALT deduction. There are 9 states without state income tax. Most of them are red (Washington is a notable exception). This disproportionately hits blue states; and
3. Reducing the cap for the mortgage deduction, which again only affects expensive states.
We have a hung Senate, essentially. A better description is to say that it is controlled by Charles Koch, who owns Joe Machin and the Republican Party.
So these tax hikes on blue states haven't been rolled back under Biden because of Charles Koch, basically. In the proposed bill, the SALT deduction isn't getting reinstituted, the mortgage cap is the same and the corporate tax cuts (you know, the ones that will trickle down) are only getting partially rolled back.
And even that might not pass.
But what this means is that there is now a huge financial incentive for workers in California and New York in particular to move south. Hell, it was a significant factor in me moving from NYC to Florida, as an example.
But I wonder if the unintended consequence of McConnell's and Trump's giant middle finger to the blue states could be the migration of left-leaning voters to Texas, Florida and even Tennessee and Georgia (GA has a state income tax but Atlanta is cheap compared to CA/NY).
Perhaps Tesla's move is part of that trend.
It would be entertaining, to say the least, if this hastened the political extinction of the party of Trump. The trends were such that Texas is likely to be a battleground state in ~10 years as it is.
I can but hope.
alt: https://www.cnbc.com/2021/10/07/tesla-moves-its-headquarters...
While this move is great, I'm skeptical of the idea that moving to Austin is a political panacea for moderate/center-right/libertarian governance.
- The same percentage of people who voted for hard leftist candidates in SF also voted for hard leftist candidates in Austin. Don't believe me? Check it out for yourself: https://en.wikipedia.org/wiki/2020_Texas_Democratic_presiden... This means that, fundamentally, people in Austin believe the same things that people in California do.
- There are homeless issues in Austin, just as there are in SF (though not as bad as SF, it's getting worse every year).
- Many people don't realize how regulatory constrained Austin is for new buildings/housing. The same NIMBYism exists in Austin too, just like SF! But this isn't surprising since people in Austin basically have the same politics as people in SF. The only reason why rents are cheaper (though that's changing as more people move in), is because Austin isn't as big as SF. If all of the intelligent tech people moved to Austin, it would have the same supply & demand problems that SF has (since you'd have the same number of people mixed with the same regulatory constraints on new housing supply).
- Yes, it's true Austin is a place with zero income tax and fewer business regulations, but that's only because it's held at bay by the surrounding red regions of Texas. But it's only a matter of time before Texas turns blue. So in the long-run -- when the state house will be controlled by the same party running California -- why would you expect tax rates and regulations to stay low? In 10 years, Texas will have the same political makeup (at the city, state, and federal levels) as California!
- The bulk of taxes and regulations aren't at the state/city levels. They're at the Federal level. A zero percent state income tax is cool, but it only goes so far. Is the entire tech ecosystem really going to sustain this movement for a mere 10% drop in total taxes? The SF/NYC network effects are still very strong. I'm not sure such a marginal/incremental decrease in taxes is enough to affect this sort of change.
Power to Tesla though. I really, really hope to be proven wrong.
- Homelessness in Texas has decreased by 55% since 2010.
- Homelessness in California has increased by 35% since 2010.
So, there is massive a 90% gap. California is obviously doing something wrong there.
Source: United States Interagency Council on Homelessness.
I think the geographical constraints of SF (water all around) amplify the power of the above groups at the expense of others. Austin may have more space to gradually expand and spread out in a way that is more equitable and does not so disproportionately reward those who were there first.
So it’s safe for glibertarians now.
https://www.texastribune.org/2021/08/09/austin-texas-camping...
Given that half of Elon's wealth is Tesla stock, what makes Elon money is pretty much inseparable from what makes the company money. Weird thing to complain about.
It feels that : 1. It's way out of temperate climate that one would live in when given full choice and all things equal (understanding they never are of course - I live in great white North :)
2. Politics are highly conservative and frequently invasive. now clearly half of Americans like it that way,but still,seems odd for largely progressive company like Tesla that's ostensibly working to put oil industry on defence... And that's not even allowed to sell there.
Taxes?some quid pro quo to get sales in? Something else?
Texas actually has some of the highest property taxes[1] in the nation, which (unintuitively to some) helps keep down the price of property. Countless studies (can share links if you like) demonstrate that property taxes (and land taxes in particular) are capitalized into the price of land.
California has some of the lowest property taxes, which when paired with Proposition 13, means it has some of the most expensive real estate in the nation.
[1] https://en.wikipedia.org/wiki/Property_tax_in_the_United_Sta...
2) Texas politics are invasive if you're a woman in need of an abortion, sure. But then, California politics are invasive for everyone who earns an income. If Texas politics are 'frequently invasive', then California politics must be downright suffocating.
This is marketing. Read up on how Tesla treats its workers and you'll see what their leadership's real values are.
I think the writing is on the wall for tech in CA honestly
Also in terms of workers rights etc - I wouldn't put Tesla in the progressive category either.
HQ in Texas makes a fair bit of sense given Musk lives there and he can split his time more readily between Space X and Tesla. That and building out in Texas is incredibly cheap and the level of talent needed to stock up at this point doesn't need to be as capable as the early company building staff - its more operational at this point.
Did you miss the memo? Progressives hate Tesla now.
Given Elon's previous commentary, I think he might disagree with this evaluation.
That's it, that explains everything.
What would be the top ten examples of "frequently invasive" conservative policies in Texas? Just wondering what your perspective might be on this.
No forward thinking company should be setting up there right now.
Elon has options to exercise in Q4 before they expire, which will realize a substantial capital gain.
By moving both personally and his business to Texas, he is likely avoiding California state income tax and capital gains, since Texas has neither.
I’d say that’s bad faith, given how much California has subsidized his companies.
This will both alleviate pressure on the Bay Area as well as accelerating the political shift to the left in Texas. It's a win all around.
I actually think that living in the Bay Area as a tech employee is increasingly unjustifiable from an ethical point-of-view. It was once the case where that was necessary for many career paths but that's increasingly not the case and the pandemic has hastened that shift.
Why unethical? Because tech workers are contributing to the displacement of the people those places need to survive.
Example: I read an article about one of the Google bus drivers and what his schedule was. It was basically get up at 4am, drive for 2 hours to work, drive a bus for 5 hours, sit around unpaid for a few hours, drive for another 5 hours then drive 2 hours home. Why? Because he couldn't possibly afford to live anywhere closer.
You can argue that NIMBYism is rampant in the Bay Area and this restricts development of housing units and you'd be right. Yet the reality is you're still contributing to that displacement even though you're not responsible for those policies.
>Yet the reality is you're still contributing to that displacement even though you're not responsible for those policies.
You're arguing that people trying to make a better life for themselves are ruining the lives of others? I think it's extremely clear that Californian's own tax policies, along with NIMBYs are to blame here, not tech workers.
But this is typical, myopic 'blame the catalyst, not the problem' I see frequently from west coast-style leftists (and i say that as a staunch leftist). Tech workers are easy to point at because they are new-ish transplants (most have been here >15 years at this point), and they are considered culturally distasteful, and moderately well off.
Nobody wants to blame the multi-million dollar single family home owning boomer who voted themselves a property tax exemption in the 70s that they can literally pass to their kids (from an ethical perspective, you should be appalled that we're currently living through the birth of an actual, landed aristocracy)
The tech workers are literally trying to make a better life for themselves. The NIMBY homeowners are literally hording wealth. Yet we blame the young tech workers... it's total nonsense.
Bay native here working in tech, and I'd argue that most SFBAY constituents are contributing to the NIMBY problem, not just tech workers. The vast majority of the workforce in the Bay doesn't work in tech, and they oppose new housing just the same.
The incentives just don't align for there to be a local solution to this problem. Unfortunately it seems this will have to be taken out of local control via bills like SB9 and SB10 that are slowly but surely chipping away at the problem.
The sad thing though is that it seems even when you disperse highly paid workers who can work from home, inequality will continue even in other markets, see Austin, Miami [0], Nashville [1].
Then again, those markets were booming even before tech workers moved to there.
[0] https://therealdeal.com/la/2021/09/28/miami-nips-at-ny-for-t...
[1] https://fox17.com/news/local/real-estate-market-so-hot-this-...
I still agree with you for a different reason though - if you believe that it’s a poorly governed place, at some point it becomes immoral or at least unwise to continue to sustain it with your tax dollars.
The right solution is to fix the root cause (NIMBYism) not throw your hands up and move.
