December 2, 2021 Updated: December 6, 2021
Commentary
Elon Musk will be saving a lot of money leaving California.
According to Bloomberg on Nov. 29, “Elon Musk’s California
Exit Can Save Him $2 Billion in Taxes.” Subhead: “The billionaire’s sale of
multiple homes was a crucial step in fleeing the high-tax state.” Doing so will
“enable the Tesla co-founder to declare he’s no longer a resident of a state
that’s home to the nation’s highest income taxes on the wealthy.” The top rate,
which he pays, is 13.3 percent just for the state.
That’s a lot of money to be saved. Except he’s worth $282
billion as I write. So he’ll save less than 1 percent of his net worth. Not a great
reason to leave the balmy climate of Silicon Valley for the heat and humidity
of Austin, Texas.
Although he hasn’t announced it, the real reason he’s
leaving likely is because the top engineering talent he needs for his companies
has been relocating to Texas from California. An engineer making, say, $1
million a year doubles or triples his quality of life—climate aside—by moving
to a low-tax state such as Texas, Florida, or Tennessee. No wonder they have
been moving out of the Golden State to the Lone Star State and other states.
That’s why other high-tech companies are moving out.
Entrepreneur magazine reported in July: “With big names like Oracle, Palantir, and Hewlett
Packard Enterprise leaving Silicon Valley for good, California’s status as America’s tech hub could be coming into question. The shift to remote work created
a wealth of new possibilities; tech professionals are taking advantage of the
new standard of flexible work by relocating
to more affordable areas.”
Tech Behemoth said Oracle moved to Austin because “a
large talent pool that is constantly growing and willing to work remotely means
a favorable environment for Oracle.”
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Then there’s education. The national high school
graduation rate was 88 percent in 2019, according to an April 2021 survey by
U.S. News & World Report. For Texas, it was 93 percent. But for California,
it was just 85 percent.
Texas also enjoyed 290 high schools with 100 percent
graduation rates, compared to just 63 for California. Yet Texas’s population is
three-quarters that of California’s.
According to the latest federal Nation’s Report Card,
which tallies the National Assessment of Educational Progress (NAEP), for
fourth graders on math, the national average score was 240 (out of 500). The
top state was perennial leader Minnesota at 248. Texas, at 244, was
“significantly higher” than the national level. California was at 235,
“significantly lower” than the national level.
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California public schools also now will be wasting
precious hours on the new, semester-long ethnic studies program. Apart from the
controversial nature of the curriculum The Epoch Times has been covering, those
are hours that could have been spent learning math, science, language, and
other subjects vital to the competitive future.
Another aspect is parents tend to encourage their
children to take up similar vocations. Steve Wozniak was the genius engineer
behind the Apple I and Apple II computers. His father worked as an engineer on
top-secret Defense Department projects—a real rocket scientist. Bill Gates’s
father was a wealthy lawyer in Seattle who encouraged his son’s interest in
computers at a private school that had one of the first computers for students.
Engineers moving to Texas means more children of
engineers will grow up there, and be more likely to stay and work there.
Texas still lags in U.S. News’ 2022 rankings of public
universities, with the University of Texas at No. 38. That’s behind the Ivy
League schools at the top, as well as Cal Tech (9), UCLA (20), University of
California–Berkeley (22), USC (27), UC–Santa Barbara (28), UC–San Diego (34),
UC–Irvine (36), and UC–Davis (38, tied with Texas).
That’s not as bad as it seems. While high school usually
depends on where your parents locate, top talent can go anywhere to college,
often on generous scholarships. After graduation, they also can go anywhere.
Add it all up and taxes come out less important than the
other anti-competitive aspects of living in California. It’s not all negative.
But businesses operate “on the margin.” They’re always competing and need the
best workers to keep them on top.
Musk and the other tech executives are just following the
talent southwest to Texas.
Views expressed in this article are the opinions of the author and
do not necessarily reflect the views of The Epoch Times.
https://www.theepochtimes.com/the-real-reason-elon-musk-is-leaving-california_4134651.html
https://www.nationsreportcard.gov/profiles/stateprofile?chort=1&sub=MAT&sj=&sfj=NP&st=MN&year=2019R3
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Read more:
When Companies
and Top Talent Leave California, the Midwest Opens Its Arms
https://www.entrepreneur.com/article/377949
Elon Musk’s
California Exit Can Save Him $2 Billion in Taxes
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including violent felons
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https://www.nbcnews.com/news/us-news/76-000-california-inmates-be-eligible-earlier-release-n1266044
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