The Golden State has been losing its citizens to the Lone Star State for a few years now. Ever since the pandemic, the rate of immigration has increased, and many Californians think that the move to Texas hurts their wallets a lot less.
It’s not just homeowners who are packing up; business owners also see Texas as far less taxing than California. Elon Musk shifted his Tesla headquarters to Texas from California at the end of 2021.
The increased rate of immigration is being referred to as the “doom spiral” affecting California.
Why are People Moving from California to Texas?
People who move from California to Texas have varying motives, but some common ground can be found in Texas’ lesser tax rates, affordable housing, and business-friendly environment.
#4 Housing Prices
California has one of the highest housing prices in America. The average home in California is valued above seven hundred thousand dollars, while in Texas, it is around three hundred thousand. While these are just average numbers, and prices can differ from place to place, it is still a whopping difference.
Eight Californian cities have been ranked among the ten highest-costing cities in America for housing.
#3 Taxes
One of the biggest reasons people choose Texas over California is the taxes. Texas does not impose personal income taxes, unlike California. Taxes based on vehicle value is also not levied in Texas. Sales taxes, as well as gasoline taxes, are lower in Texas. In fact, gasoline prices in California are double that of the Lone Star State.
Californians can pay around 13% in state income tax, while Texas asks for no such thing. Texas has no corporate income tax on businesses, but California imposes an 8.84% tax. This attracts businesses that are just starting out in Texas.
#2 Cost of Living
According to the Bureau of Economic Analysis, California is 15% more expensive to live in than the overall USA if housing, goods and services, and purchasing power are considered together. Costs for goods (cars, gas, furniture, food) are 4% higher than in the US on average. Costs for services (health care, auto repair, etc) are 7% higher.
In Texas, food, entertainment, and even childcare can be cheaper. All the savings together can save thousands of dollars if people move to Texas from California.
#1 Employment Opportunities
Texas is known for its strong employment prospects for both blue and white-collar workers. As it is centrally located in the USA, flying to either coast from most large cities is cheaper. The cheaper business tax is attracting many businesses to the state, and employment opportunities have grown much more.
Why are California Companies Moving to Texas?
The number of companies that have left California has been increasing since the pandemic. The 8.84% corporate income tax in California, combined with the 8.82% state and local sales tax, makes it one of the most expensive states for businesses. Texas levies no corporate income tax and a combined local and sales ta of 8.2%, so business owners are attracted to the state.
According to a report, from 2019-21, out of 108 relocated companies, 56 have moved to Texas. The ease in business taxes, lesser cost of living, and housing prices make it an overall good place for business owners to relocate to.
As the Houston area is the center of oil and natural gas development in Texas, it enables the state to lead the US in energy production and job growth fueled by oil and natural gas workers. Numerous household names like Apple, Tesla, Amazon AT&T have moved relocated to Texas in the previous years.
In conclusion, many people find living in Texas easier than living in California. Of course, there are some disadvantages, like hotter weather and a lower median household income, but to some, becoming a homeowner for the first time beats out all the odds.
So which state do you prefer for a living? Tell us in the comments below.
