Tesla Moves Headquarters Again: Now From California To Texas

Tesla is moving its headquarters from Palo Alto, California, to Austin, Texas, CEO Elon Musk announced at the company’s shareholder meeting on Thursday. The meeting took place at Tesla’s vehicle assembly plant under construction outside of Austin on a property that borders the Colorado River, near the city’s airport. 

Tesla’s board granted Musk an executive compensation package that can earn him massive stock awards based on the automaker’s market cap increases and some other financial targets. If he sells options set to expire in 2021, he could generate proceeds of more than $20 billion this year, according to InsiderScore.

California levies some of the highest personal income taxes in the country on its wealthy residents, but Texas has no personal income tax. Tesla is not the first company to move its headquarters out of California to Texas. Oracle and Hewlett Packard are among the tech giants who decided to make that move last year, for example.

Texas has been actively recruiting companies via its Texas Economic Development Act offering tax breaks to put new facilities in the state. Austin, with a top tech university and cultural events like South by Southwest, is a draw for tech employers.

Making such a move is not particularly burdensome, explained business attorney Domenic Romano, managing partner of Romano Law in New York City. A Delaware business that has operated as a “foreign” corporation with headquarters in California, like Tesla has, could relocate its domicile by establishing a facility in a new state, hiring there, and relocating key employees.

“From a legal perspective, there’s less of a regulatory burden in Texas,” Romano said. “It’s a more business- and employer-friendly state in many ways. You have to jump through far fewer hoops in Texas or Florida as an employer than you do in California in terms of reporting requirements and more.”

Tesla has not been happy with one set of regulations in Texas at least. The state bans direct sales of cars. Instead, car companies sell their vehicles through independent, franchised dealerships there. In other states where similar laws apply Tesla has fought to change the rules or exploited some loopholes, for example, by setting up their own store and service center on tribal lands in New Mexico.

Texas Gov. Greg Abbott said the Tesla CEO supported his state’s “social policies” as well. However, Elon Musk declined to weigh in on Texas’ restrictive new abortion law after Abbott made that claim. “In general, I believe government should rarely impose its will upon the people, and, when doing so, should aspire to maximize their cumulative happiness,” Musk wrote on Twitter at that time. “That said, I would prefer to stay out of politics,” said Musk.

Tesla has generally garnered a huge amount of support from the state of California since it was founded there in 2003. It has enjoyed grant funding, tax breaks, incentives, and favorable policies from the likes of the California Air Resources Board, California Energy Commission, and California Alternative Energy and Advanced Transportation Financing Authority, among others.












SOURCE: CNBC
IMAGE SOURCE:PIXABAY