California, once the land of opportunity, innovation and prosperity, is seeing an exodus of businesses moving their headquarters to other states. The latest came on February 13, when In-N-Out Burger decided to close its Irvine, California, headquarters after 30 years. The company is consolidating its West Coast offices into one location in Baldwin Park, California. In-N-Out is opening a new eastern territory headquarters in Franklin, Tennessee.
While Democrats in Sacramento and Gavinomics continue to push big-government policies, over-regulation and sky-high taxes, companies are voting with their feet and heading for more business-friendly environments. What was once the epicenter of entrepreneurship is now a state suffocating under its own policies, driving out job creators and economic growth. It’s no wonder the Golden State isn’t so golden anymore.
California’s tax policies are among the most punitive in the nation. The state imposes a top marginal income tax rate of 13.3% — the highest in the country — and a corporate tax rate of 8.84%. Compare that to states like Texas and Florida, where there is zero state income tax, and it’s easy to see why businesses are fleeing.
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Or, even closer to home, states like Nevada, which has zero taxes as well, and why Hollywood elites are literally moving across the border and California is implementing an exit tax on wealthy people who want to leave the state.
Beyond just high tax rates, California continuously implements anti-business policies. The passage of AB5, which severely restricts independent contractors and freelancers, has wreaked havoc on industries that rely on flexible employment models. Democrat Gov. Gavin Newsom thought a $20-an-hour minimum wage would solve the problem, but it just keeps the cost of eating out at the highest levels in the country.
California politicians love regulations. In their quest for an overbearing government that micromanages businesses, they’ve created one of the most hostile environments for job creators. Companies must navigate thousands of pages of employment laws, environmental restrictions, and endless bureaucracy.
Take, for example, the California Consumer Privacy Act — a well-intentioned, but overcomplicated, law that adds massive compliance costs for businesses, particularly small and mid-sized companies. Then there’s the state’s aggressive environmental policies, such as the push for electric vehicles and net-zero emissions, which force companies into costly compliance measures that drive up operational expenses. This is exactly the reason that business owners want to get back to the idea of small government, less regulation and letting the free market decide what makes sense.
California’s exorbitant cost of living is another factor pushing businesses away. Employees struggle to afford housing in cities like San Francisco, Los Angeles and San Diego, where median home prices are well above $800,000. The state’s insistence on stringent zoning laws and environmental restrictions has exacerbated the housing crisis, making it nearly impossible to build affordable homes.
For businesses, this means higher wages just to keep up with the inflated cost of living, which in turn raises costs for consumers. Companies that want to attract and retain top talent are finding it much easier to relocate to states where employees can afford to buy a home and raise a family. It’s why Nashville and Atlanta have absolutely boomed over the past decade.
California’s once-thriving cities are now riddled with crime, homelessness and failing public infrastructure. San Francisco, once a beacon of economic prosperity, is now better known for open-air drug markets, rampant theft and businesses shuttering their doors due to unchecked lawlessness.
Companies like Nordstrom and Walgreens have closed major locations due to out-of-control shoplifting, thanks in part to lenient policies like Proposition 47, which decriminalized theft under $950.
Businesses do not want to operate in cities where employees don’t feel safe, and customers are deterred by rising crime. Yet, California’s leftist leaders refuse to address these issues, instead blaming everyone but themselves for the collapse of law and order.
The rise of remote work has accelerated the California business exodus. The COVID-19 pandemic proved that employees and companies could thrive without being tied to a physical location. Now that businesses can relocate their operations without disrupting productivity, they are choosing states with lower taxes, fewer regulations and a better quality of life for their employees.
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Instead of recognizing this shift and making California more attractive for businesses, state leaders doubled down on bad policies, pushing wealth out of the state at an alarming rate.
As California drives businesses away, states like Texas, Florida, and Tennessee are welcoming them with open arms. These states offer zero state income tax, lower corporate taxes, fewer regulations and pro-business leadership that incentivizes job creation rather than punishing it.
Texas, for example, has become a magnet for companies like Tesla, Hewlett-Packard and Oracle, which all moved their headquarters out of California in search of a better economic environment. Meanwhile, Florida, under strong conservative leadership, continues to attract financial and tech firms looking for stability and growth opportunities.
There’s a reason the burger company went In-N-Out of California
According to the Hoover Institution, over 350 businesses moved their headquarters out of California from 2018 to 2021. Eleven of those were Fortune 1000 companies. In-N-Out Burger has been a staple of the West Coast fast food as Chick-Fil-A has been to the Southeast United States. So many of us that live on the East Coast only get a chance to eat from the fast-food chain when we make a West Coast swing. With the state of California becoming the most expensive and difficult place to do business, in my view, In-N-Out decided it was time to take the drive through lane for a different change of scenery where taxes are low, regulation is lighter and people are excited for free enterprise.
