Photo by Pete Alexopoulos via Unsplash
Lone Star Bound

Lone Star Bound

Frisco, Texas — nestled in the north Dallas-Fort Worth metroplex — has been making headlines for the number of companies flocking to the city to take advantage of its business-friendly environment and rapid growth. This month, the Frisco Economic Development Corporation (FEDC) released a statement highlighting the city’s impressive 2022 track record, having welcomed sixteen new corporate brands — including a Fortune 500 regional headquarters — and the announcement of four major corporate expansions.

In January 2023, the veteran-founded, military-grade eyewear company Wiley X completed its relocation to Frisco. The company had previously operated in the Bay Area, but announced in March 2021 that it was leaving California. Wiley X’s Director of Marketing, David Villarina, said that “in order for us to take this company to the next level, we believe that an environment such as the one in Frisco is going to help us accommodate more aggressive growth.” He described Texas as “a business-friendly state regarding taxes, regulations, compliance”  — a description  few would award California. In 2024, Wiley X plans to open its first-ever flagship retail store at its new 65,000 square-foot Frisco headquarters. 

“We are excited to get to work in Texas and thankful for all the support we’ve received here, ” Frisco co-owner Dan Freeman said. 

Credit compliance company Informativ is also leaving California, moving its headquarters from Fresno to Frisco. With many of the company’s executives and more than half of the employees located in the Dallas-Fort Worth area, the company moved where it had more opportunity to expand.

Also in January, global tech giant McAfee, while maintaining corporate headquarters in San Jose, announced they chose Frisco for new regional headquarters to launch the company’s expansion. Benni Bueckert, Vice President of Workplace and Engagement, cited Frisco’s culture and the opportunities it offers employers and employees to be part of a vibrant community as factors influencing the move. (McAfee’s new CFO and EVP Jennifer Biry will work from Dallas.) 

McAfee’s vote of confidence in Frisco underscores the draw of business-friendly cities in low-regulation states. 

“[W]e see endless possibilities with this partnership [with Frisco],” explained Benni Bueckert, McAfee’s VP of Workplace and Engagement.

Longtime California companies relocating to Texas is an ongoing trend. YTexas, an elite business network supporting companies in the Lone Star State, releases yearly reports highlighting corporate relocations and expansions. Its most recent report, published last year, shows that 25 out of 62 corporate relocations to Texas in 2021 came from California. That means California alone accounted for 40% of the nation’s corporate relocations to Texas that year. 

Outside of Frisco, the broader Dallas-Fort Worth area has drawn relocations or expansions from Charles Schwab and the nation’s largest drug distributor McKesson, both of which relocated from San Francisco. 

The years-long trend is not limited to corporations. Hartman Income REIT Management, Inc. reports that more than 687,000 Californians have relocated to Texas since 2010. Their analysis reveals driving factors to be low tax rates, low cost of living, and low corporate rent. 

U-Haul’s migration data reflects Texas’ dominance in terms of interstate relocations. Texas has been in the top three states for inbound migration every year since 2016. During each of those years, California has been in the bottom three — ranking last (50th place) in 2017, 2020, 2021, and 2022. 

In a bungled attempt to respond to the deluge of Californians moving to Texas, California Gov. Gavin Newsom claimed: “Our tax rates, again, are lower than the state of Texas, I just want to remind everybody out there. Ninety-five percent of Texans pay higher taxes than Californians.” Newsom’s office cited a 2018 study by the Institute on Taxation and Economic Policy, but the institute’s spokesman said they “do not compute a specific percentage of Californians who pay less/more tax than Texans.” 

Finance expert David Bahnsen, pointing out that Texas has no income tax and a lower sales tax than California, called Newsom’s claim “categorically false” and “a complete fabrication.”

Sadly, the yearly exodus of residents and businesses from California will not end any time soon. While California politicians double down on their anti-business regulations, companies are voting with their feet – and their headquarters – in favor of cities and states that promote growth instead of hindering it.

 

Sheridan Swanson is a Research Associate with California Policy Center.

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