Rumors are swirling about Elon Musk leaving California to set up home in Texas. It should come as no surprise seeing as though Musk announced via Twitter in May this year that he intends moving Tesla’s headquarters to Texas or Nevada.
Companies founded by Elon Musk that have operations in Texas include Tesla, SpaceX, and The Boring Company facilities in Austin and Boca Chica. Tesla’s next USA Gigafactory is currently under construction in Austin where the Cybertruck, Model 3 and Y, and the Tesla Semi vehicles will be manufactured.
The reason for Elon Musk’s move to Texas could be two-fold. When the coronavirus pandemic hit America, Musk was at constant loggerheads with the Californian government over lockdowns that affected the EV manufacturer’s production. However, last month, Tesla employees were listed as essential workers in the state’s new COVID-19 health regulations, which means the issues between the state and Musk could be resolved, for now.
Another feasible reason is that Texas offers huge benefits regarding tax. Tesla is already receiving millions in property tax breaks for building the 2,100 acre Gigafactory and state also has Zero personal income tax. This would make sense for the billionaire if he wants to pay significantly less in taxes as he now stands to earn over $50 billion in stock options. If he remains in California, Musk will have to pay income tax on profits when he exercises his stock options and California has the highest tax rate in the country. And as Tesla’s keeps hitting financial targets and sees a rising share price, it will inevitably keep increasing the CEO’s tax bill. So, a move to Texas would seem like the smart thing to do.
Earlier this year, Musk sold off all his properties in California. During his podcast interview with Joe Rogan, he said “possessions kind of weigh you down.” And then used Twitter to confirm that he intended to sell his properties and that he “will own no house.”
He might have to backpedal on this one because in order to qualify as a Texas resident and be eligible for the zero income personal tax, the EV boss will have to purchase property in the state.
Musk who is now the world’s second-wealthiest person will be following in the shoes of Jeff Bezos, the Amazon CEO who has already setup home in Texas, probably as a tax maneuver too. Joe Lonsdale who is the co-founder of Palantir and an investor in the Boring Company has also made the recent move from Silicon Valley to Austin. Texas is definitely showing its appeal to the super-rich.
Currently, Musk spends a lot of time in Austin and the coastal village of Boca Chica where he oversees operations of both SpaceX and The Boring Company.
California has often been criticized by the wealthy for the high tax rates and stringent regulations and is now seeing an exodus of celebrities and celebrity CEOs since the pandemic. People are looking to cut costs and avoid the stiffening policies that affect working and production.
While there’s been no official confirmation on Elon Musk’s move to Texas, the state’s governor, Greg Abbott seemed to have inside info. In July, he remarked on CNBC’s “Squawk Box” that the Tesla boss recently got his Texas driver’s license and that Musk told him that he is a “bona fide Texan now.” Abbott also commented that by building the next Tesla Gigafactory in Texas means Musk will have the freedom to expand the way he wanted to.
For now, though, Tesla’s headquarters remain in Palo Alto, California while continuing production at the Fremont facility, and SpaceX’s official address is still at 1 Rocket Road in the Californian country of Hawthorne.
Perhaps the new year will bring about big changes in where Elon Musk and his family formally reside and where his companies will officially operate from. Only time will tell.