Chevron Leaving The Golden State: Jonathan Williams on NewsTalkSTL Radio
California is continuing to hemorrhage its business community and its population to the other 49 states.
ALEC Executive Vice President of Policy and Chief Economist Jonathan Williams was featured on NewsTalkSTL with hosts Tim Jones and Chris Arps to discuss the impact of high taxes and regulations on businesses, using Chevron’s departure from California as a case study.
The Exodus from California
California’s high tax rates, stringent regulations, and escalating costs of living have driven many companies and individuals to seek greener pastures elsewhere. Williams highlighted this trend during the interview. He noted that California has seen a net loss of approximately 350,000 residents in the last year alone. The departure of Chevron, a Fortune 500 company with a long-standing presence in California, is a significant blow to the state’s economy and a clear indication of the growing discontent among businesses with the state’s economic policies.
It’s just another huge drop when it comes to California continuing to hemorrhage its business community and its population to the other 49 states. We’ve noted in our annual Rich State, Poor States report that based on the net migration of individuals, California is down roughly 350,000 in the last 12 months.
Why Chevron Left
Chevron’s decision to move its headquarters to Texas is rooted in the state’s more favorable business environment. Williams commended Chevron’s CEO, Mike Wirth, for being transparent about the reasons behind the move, stating that California had simply become too expensive to operate in. Texas, on the other hand, offers a lower tax burden, no personal income tax, and a more business-friendly regulatory environment. These factors make it an attractive destination for companies looking to reduce costs and improve profitability.
In Chevron’s case, the real credit deserves to be given to the leadership of the company as well as the CEO, Mike Wirth. He came out publicly as a part of this move and said what needed to be said, which is, California became too expensive, and that’s why we’re leaving. We wanted to look out for our consumers, for our employees, for our shareholders, and doing what’s right for the company. Kudos to CEO Mike Wirth for making that decision because far too many businesses shy away from that for fear of reprisal from elected officials and politics.
The Broader Implications
The implications of Chevron’s departure extend beyond just one company leaving the state. It signals a broader trend of economic decline in California, as other businesses and wealthy individuals are likely to follow suit. This exodus has already led to significant budget deficits in the state, with California’s once robust surplus dwindling rapidly. Williams pointed out that the loss of major businesses also means the loss of valuable tax revenue and charitable contributions, further weakening the state’s economic foundation.
When you lose these pillars of your community, you lose the revenue, you lose the job. Another thing that a lot of people don’t spend time to think through is that when business owners, see these tax hikes that live on these types of relocation decisions, and only do they take they’re tax revenue with them, thus taking their contributions to the community writ large.
The Appeal of Low-Tax States
As California grapples with its economic challenges, states like Texas and Florida are thriving by attracting businesses and individuals with their low-tax policies and favorable business environments. Williams emphasized that these states have seen substantial inbound migration and economic growth as a result. The contrast between the economic policies of states like California and Texas underscores the importance of tax and regulatory environments in shaping the economic health of a state.