A recent report from the Hoover Institution highlighted the ongoing exodus of companies moving their headquarters out of California to escape the Golden State’s high tax and regulatory environment.
In 2021, California business headquarters will leave the state at double the rate in both 2020 and 2019, and triple in 2018, according to a report released on October 25.
Over the past three years, California has lost 11 Fortune 1,000 companies, whose exits are expected to have a negative impact on the state’s economy.
The authors say the growing mass outflow comes down to “straightforward” economics, noting that state and local policies are driving up unmanageable operating costs. are choosing to move to states with lower taxes and a lower cost of living.
According to the report, the outflow is happening across many industries, including manufacturing, aerospace, financial services, real estate, chemicals, healthcare, and high-tech businesses.
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Large technology legacy companies such as Hewlett-Packard Enterprises, Oracle, and Tesla receive the most media attention when they leave California. But the state is also losing small businesses, which is having a negative impact on California’s economic future, the report said.
Texas continues to be a prime destination for companies leaving California. But businesses are also moving to other states where the cost of doing business is lower and the business climate is better than California, according to the report.
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“Policies have made business and housing so expensive that businesses and people are leaving the state in search of more affordable, less regulated and taxed locations,” the report said. “This process will continue until the state’s political leaders make very different policy choices, leading to a different future for California, one that respects its astonishing past.”