“California is the worst place to do business,” remarked Hill Davis, a businessman from the state, during a conversation with Fox News Digital.
This frustration prompted Davis, who is the CEO of Digital Brand Group, to relocate over 1,300 miles to Texas.
His apparel and e-commerce firm has established its new headquarters in Round Rock, located just north of Austin. They’ve now leased around 70,000 square feet for warehouse and office use as they expand their college sports apparel line.
Davis mentioned that the costs associated with the new Texas facility are roughly equivalent to what they were paying for their previous location in Vernon, California, which is about eight miles south of Los Angeles.
However, rent is just one part of the picture.
He highlighted California’s steep cost of living, lengthy employee commute times, and the increasing expenses of doing business, which include legal defenses against lawsuits.
“All these things start to add up,” Davis said. “It’s not working. It just doesn’t make sense. It’s too tough.”
This relocation comes amid broader discussions in California about whether the state’s costs, taxes, and regulations are pushing businesses and affluent residents away.
There’s growing contention over a proposal to implement a one-time tax of up to 5% on Californians earning over $1 billion.
Proponents argue this billionaire tax could generate substantial revenue for health care and essential public services, while opponents warn that it may drive significant taxpayers to leave and deplete future tax income.
California is already witnessing an exodus of taxpayers and their income. Los Angeles County has seen the largest taxpayer losses in the nation, with 17,496 tax filers relocating to other states, taking approximately $1.9 billion in income along with them, according to recent IRS statistics.
The losses extend beyond Los Angeles, with Orange County losing 11,618 taxpayers, followed by San Diego County with 9,401, Riverside County with 8,968, and San Bernardino County with 8,462.
This outflow could have fiscal repercussions. When taxpayers depart, the income they take often shrinks the state and local tax bases that support schools, public safety, and infrastructure.
Davis doesn’t predict a dramatic rush of departures from California. Instead, he anticipates a gradual trickle.
“We don’t know if there will be an explosion,” he noted. “I think there will always be leaks.”
California still has its strongholds. Silicon Valley remains a magnet for tech talent and investments, while Los Angeles boasts a wealth of creative professionals. Davis conceded that replicating the “center of gravity” found in these industries is quite a challenge.
Even though Digital Brands Group is moving its headquarters to Texas, some manufacturing will still occur in Los Angeles.
Round Rock presents Davis with a new equation—lower operating costs, a central hub for distribution to universities nationwide, and access to Austin’s creative workforce. He also noted that permitting for new facilities happened relatively quickly.
Now, employees have options. Some are excited about the move to Texas, while others have deep ties to California and may choose to stay.
Digital Brands Group has already made its decision, and as California contemplates how to tax its wealthiest, Davis observes that the ongoing narrative unfolds, company by company.
