Musk Takes Jab at Silicon Valley
The Wall Street Journal reports Elon Musk Moves to Texas, Takes Jab at Silicon Valley.
During the spring, when Mr. Musk was sparring over coronavirus shelter-in-place orders that shut his factory near San Francisco, California Gov. Gavin Newsom told CNBC he was “not worried about Elon leaving any time soon” and the state was committed to the car maker’s success.
Tesla’s new car plant, its first U.S. factory outside Silicon Valley, is slated to open in Austin next year. Mr. Musk’s rocket company, Space Exploration Technologies Corp., or SpaceX, has operations in South Texas, leading Mr. Musk to spend a lot of time in the state. He filed paperwork in late October to move his personal foundation from California to Austin, according to local records.
Mr. Musk broadly criticized government regulations as stifling startup creation and favoring monopolies or duopolies. He called for the government to “just get out of the way” of innovators.
Other Companies Fleeing California
- Hewlett Packard Enterprise, whose origins trace back to the founding of Silicon Valley, said it planned to shift its headquarters to Texas.
- Palantir Technologies Inc., founded in the Bay Area in 2003, moved its headquarters to Denver this year. CEO Alex Karp, who co-founded the company, linked the departure to what he says is a view in Silicon Valley that is out of touch with American principles and societal needs.
- Two other prominent conservative venture capitalists, Peter Thiel and Keith Rabois, have cited what they see as Silicon Valley’s liberal politics as reasons to relocate. Mr. Rabois said he is headed to Miami. Mr. Thiel has moved to Los Angeles.
Rent Dives 35% in San Francisco
The rise of remote work in the wake of the Covid-19 pandemic is remaking one of America’s priciest places to live.
Bloomberg reports San Francisco’s 35% Plunge in Rents Shows Effects of Tech Fleeing City.
The resurgent coronavirus has thrust the tech hub back into lockdown. Offices sit empty as work-from-home policies stretch indefinitely. While this week’s share sales of hometown companies Airbnb Inc. and DoorDash Inc. would typically have the city girding for a flood of wealth, many workers have already fled for the suburbs, Lake Tahoe or beyond.
Nowhere are the effects more pronounced than in the real estate market, where apartment rents are plunging the most in the country.
The median rent for a studio apartment dropped 35% last month from a year earlier, to $2,100, while costs for one-bedrooms were down 27% to $2,716, according to data set to be released this week from Realtor.com. The declines are steepening from earlier in the pandemic, a sign that people with the flexibility to move are leaving an area that’s still among America’s priciest for housing.
San Francisco’s office-vacancy rate has roughly doubled this year to 8.3%, driving asking rents down almost 9%, according to real estate firm CBRE. Earlier this year, Pinterest Inc. shelled out almost $90 million to terminate its lease in a new downtown tower because it is “rethinking where future employees could be based” in a post-Covid era. Housing startup Opendoor paid $5.2 million to end its downtown lease early, a regulatory filing showed.
Taxes, Taxes
Texas does not collet state income tax nor does it tax capital gains.
California’s top income tax rate is 13.3%, the highest in the nation, with similar taxes on capital gains.
Musk qualified this year for billions of dollars in stock-option compensation as part of a pay-package agreement, making him the second-richest person in the world.
Now he gets to keep 13% more of what he earns.
Goodbye San Francisco, Hello Austin
Musk said hello to Austin. He’s not the only one.
For more on Austin, please see Covid Makes Austin a Magnet for New Jobs.
Correction
My subtitle stated “Elon Musk moved Tesla to Texas. He’s not the only one who has had enough of California.”
I corrected the subtitle to “Elon Musk moved to Texas. He’s not the only one who has had enough of California.”
That said, Tesla’s new car plant, its first U.S. factory outside Silicon Valley, is slated to open in Austin next year.
Mish
I saw that on Friday. More good news for Austin.
Move over Musk!
Oracle is moving its headquarters from Silicon Valley to Austin, Texas
Published Fri, Dec 11 2020
Key Points
To paraphrase the Reeses’ Peanut commercial, keep your California out of my Texas.
also FLA & TX has a higher per capita death from Covid 19, and higher uninsured rate.
that wrongwingers do not say about CA is that it went downhill due to Proposition 13 and the fact the Cold war ended in late 1980’s. this allowed the US govt to cut back on defense spending which underpined the CA economy since WWII.
last time i check CA had higher per capita income than TX and FLA
California could actually evolve into a nice place to live again!
I left California 3 years ago. I’m middle class. The main reason I left was the Nazi like tactics of the Franchise Tax Board (the agency that collects state income taxes). Every year, I would receive a letter from them stating how much more taxes I owed even though my CPA/CA tax attorney said I didn’t owe any more. And it cost me $1100 to have my tax return completed, in addition to the several thousand in state income taxes. Here in Florida, same return costs me $400, and NO state income tax.
Sounds like should have replaced your CPA/Tax Attorney. [lol]
The problem with California is that it is a one party state with large numbers of low information voters. Very little incentive to change party policy. Sort of like the PRI of Mexico that refused change for decades.
(sarcasm) See, California has solved the affordable housing crisis.
This main thrust for this for Musk or any of these tech entrepreneurs is not taxes but rather that culturally and economically for the average person California is played out, cities like Austin are now where people want to be especially for the younger workers.
Musk needs hundreds/thousands of idealistic young people to write code/engineer/etc. for Tesla/SpaceEx, for all his Twitter and showman persona he still needs talented idealistic workers to work for him.
Austin is the place to be for that right now.
How long will it be before enough Blue State leftists pile into Texas and start raising taxes in Texas?
Klaus Schwab’s plan is for no one to own anything and be happy by 2030.
Build it back better.
You can hardly get more libtard than the People’s Republic of Austin, but the backlash against rising taxes and bad management is increasing even amongst liberals. We watched California, and we’re going to avoid making the same mistakes. We’ll make our own, fresh, inventive mistakes instead. 🙂
Mish – I’ve run the numbers and if you look at the tax burden in Texas and CA its pretty much a wash. CA has very low property taxes and high income taxes. Texas has sky high property taxes and no income taxes. But for a couple making $300k and living in a $900k house in Austin it’s six of one half dozen of another.
Obviously Mr. Musk’s situation is different. But for a well compensated Tesla employee it’s not.
Doesn’t look like you can get a house much better for that money in Austin than California, either. Plus… you have to live in Texas.
For 750K I’ll sell you a live-water ranch within reasonable commuting distance to the new Apple campus….forty acres that is so beautiful it makes me cry to consider even putting it on the block.
You won’t get that deal in San Jose or Santa Clara or Sunnyvale…. 🙂
Define reasonable leaving at 8am.
Hey, I have no sympathy for the 8 am crowd. At 8 am I’ve been working for an hour already. 🙂
I leave the house in Rob Roy at 6:30 and make it all the way to Round Rock by 7 sharp. The early bird beats the traffic.
Google maps says it’s 41 minutes from my rural place to the new Apple campus…. with “usual traffic” (39 miles).
You could probably work from the ranch if you worked for Apple, anyway. 🙂
Meanwhile, back at the ranch:
U.S. home prices march upward
10 Dec 2020
Middle-income housing across America — particularly in big coastal cities — is growing scarcer than ever, as the wealthy bid up properties that might once have been considered “affordable.”
Why it matters: The pandemic’s effects on the housing market may turn out to be permanent — and could widen the gap between rich and poor. Renters and buyers alike face rising prices that outstrip income growth and favor people with cash savings.
Driving the news: The median price of a single family home in California crossed the $700,000 mark this summer — a record — setting a new standard for what the American Dream might cost.
….
A lot of CA budget money comes from taxation of the wealthy. Musk leaving CA WILL put a dent in the budget.
California’s budget depends on the rich
By Dan Walters | Orange County Register
PUBLISHED: January 22, 2020
The final pages of the 2020-21 budget that Gov. Gavin Newsom proposed this month contain arguably its most important factor — an utter dependence on taxing a relative handful of high-income Californians.
Personal income taxes, the budget projects, will generate $102.8 billion during the fiscal year that will begin on July 1, or slightly over two-thirds of general fund revenues, and 47% will come from the top 1% of California’s taxpayers who file about 15,000 tax returns in a state of 40 million people.
…
Couple of points…..journalists don’t understand the difference between “high-income” and “wealthy”. Most people don’t…but the difference is significant and worth noting.
High state income tax hits high income earners who actually work….people like me…The real rich might have high incomes, but that pales in comparison to their investment income, which is often able to be protected from income tax.
This inability to understand wealth is a burr under my saddle. “Tax the rich” really ALWAYS, ALWAYS, ALWAYS really means “tax what’s left of the upper middle class”.
Doctors and lawyers and other high skill working people. Not entrepreneurs and venture capitalists, who are the real rich. I’ve never read a newspaper writer or heard any NPR journalist who has a clue about that.
But the REASON California depends on the state income tax so heavily is because the real rich continue to get a huge break on commercial property taxes….going all the way back to Prop 13… CA voters just overturned Prop 15, which would have changed that. That outcome was bought and paid for by great misinformation disseminated BY the real rich.
Unsure if you are disagreeing with the article I posted or not???
What I’m getting at is the complete dishonesty of headlines like the one there.
“California Budget Depends On The Rich”
Headlines are the only thing that matter in a Twitter dominated world. But even if you read the whole article, you miss the most important point…..
What the author is calling “the rich” is NOT the rich. Or at least, the rich are not being taxed anything like the upper middle class, because MOST of their income and their wealth is protected from the income tax.
This might be ignorance on the part of journalists, who are mostly people who don’t know shit about money, or wealth, or taxes. Or it might be a deliberate misinformation campaign by the REAL rich….the Thiels, the Bezos, and all the entrepreneurs and venture capitalists…..who are happy to let the average reader, and the average voter, think that California unduly taxes the rich already…which is NOT the case.
Not when commercial real estate is largely tax exempt since Prop 13….way back there now. When was it? June of 1978.
So what if my state income tax on my earned income is a little high, if I can own rapidly appreciating assets for more than 40 years and not get taxed at all. The state income tax I paid over those 40 years is a drop in the bucket.
See how that works? Who owns commercial real estate? It isn’t guys like you and me…..not for the most part. It’s people who fail into the ultra-high net worth category.
[Shrug] It’s how the world works. We are governed by the wealthy/rich in general because it takes money to get elected. And the wealthy/rich are not going to change a game that they have made into something that favors their own class.
Now, if enough people wanted change, then they would be protesting in the streets, which no one is.
I completely agree…..no political will for change….Not even an understanding of the reality of how the game works, for most people.
So…that is exactly why I recommend doing what you can (within ethical limits) to get rich. And I generally support making it possible for ordinary people to bootstrap themselves…
That’s why I’m libertarian on issues like Uber and Lyft….and AirBNB…..
And I’m all for using the tax advantages of real estate ownership to protect myself from onerous taxes and the ravages of inflation.
And why I do not agree with the people who are firmly agains carrying debt. It sometimes makes good financial sense to carry debt. The rich are not afraid of taking on liabilities, if the risk/reward is very high, and it often is…especially when the Fed is holding interest rates at near zero.
One thing almost nobody gets is that financial liabilities are not all the same. Just like there are good assets and bad assets, there are also good liabilities and bad liabilities. When I finally got that (from a mentor, I wasn’t smart enough to figure it out on my own) it was a real epiphany for me. But leverage is dangerous in the hands of children…..hehehe. One has to be very prudent.
There’s Rich, And Then There’s Jeff Bezos Rich: Meet The World’s Centibillionaires
December 10, 20207
You probably think 2020 has turned out to be a pretty lousy year, what with the coronavirus pandemic, a global recession and unceasing partisan warfare in Washington.
Then again, you’re not Jeff Bezos or Elon Musk.
Thanks to soaring stock prices at Tesla, the company Musk founded, the quirky South African-born entrepreneur has seen his personal wealth soar to unimaginable heights of $147 billion.
In fact, Musk is one of only five centibillionaires in the world, or someone with a personal fortune exceeding $100 billion, according to the Bloomberg Billionaires Index as of Dec. 9.
…
I should have said “when risk/reward is very low” Or favorable, or asymmetric…that’s what I meant.
Like when you can borrow money for 3% to buy an asset that is going up by 8 or 10% per year.
I was more or less forced out a month ago by a failed government institution… the DMV. I don’t drive much, but I made multiple attempts to get my California drivers license over the past few years, before covid. Since there are lines at all the offices in my area that rival those at Disneyland (not exaggerating), I made appointments. Each time I showed up for an appointment, there was an “appointment line” that was 2+ hours long. I reached a human 3 times in all my attempts, and each time that human told me I needed some bit of paper that I didn’t have among the 5 or so I was carrying… including old license, passport, and birth certificate.
I finally took a 300 mile journey to a rural DMV that only made me wait an hour for my “appointment”. Passed my test, got my temporary paper license… hooray!
6 months later, they hadn’t sent me my real license. I didn’t drive much anyhow, so I didn’t worry about it until a few months back, when I bought a new car. Registering for insurance, I found out my license was expired… the DMV had never issued the real one. I had 30 days before the insurance company dropped me.
So I girded my loins and prepared for battle. Went to schedule an appointment, post covid. Found that no new appointments were being taken, and walk ins were not allowed. So I called. Got a recording that said, we’re too busy, call back later. Tried about 10 times, same result. There was literally no way to fix my problem.
So I packed up and moved to another state. In that state (another blue state, with no state income tax), I was able to schedule an appointment for one week later. I walked in, saw there was no line, presented the same papers that california DMV had rejected, and got my license. Total time on site: 11 minutes.
Why the hell should I be paying 30k a year in income tax to a state that treats its people like that? There are many, many beautiful places in California, and opportunities to make great money, but I am not going to endure that kind of Soviet era treatment. Nobody should.
That’s an incredible story!
My last time at a CA DMV was about ten years ago. I had an appointment and remember waiting, maybe an hour or so. Sounds like it got a lot worse!
Since your a blue dude, I’m glad you moved to a blue state! I’m red and also moved, but to a red state, so we cancel out. 🙂
Story above sounds about right. Things got a lot worse at the DMV in the last 2 years probably due to the breakdown of government function as well as the upcoming “Real ID” thing. I was facing a similar fate as Zardoz but managed to do OK: I had all the possible papers needed (more than needed in case some were reject) and stood on line outside the license-only office on a cold and rainy (yes, actual rain) January morning starting at 6:30 AM. Doors opened at 7 and I was actually out by 8:30!
Generally speaking, appointment schedule opens up 3 months in advance, with one extra day opening up every day (3 months hence). That extra day will sell out by mid morning. Sometimes people don’t get the notice that their license will expire until there are less than 3 months until expiration, so no appointment possibility for them.
That’s weird. I just renewed my CA license. Didn’t even have to go in. They sent me the form, I filled it out, mailed it in and had my license in 2 weeks. And I live in Los Angeles. Not sure why you had so much trouble.
I had moved to California from another state, so I needed a new license. Also needed to transfer a truck title so I could sell it. Couldn’t do either online, or I definitely would have.
I had the EXACT same thing happen. New license. Still not sent after MONTHS.
Had to cancel some travel plans. Thinking of leaving soon. Love San Diego area and LOVE the outdoors but airplanes can bring me back and I, too, will save about $30-40,000.
Been almost 2 months since I bought my car, and the DMV still hasn’t sent the title or plates. Unfreakingbeliviable. I’m probably going to have to get it retititled to get it licensed.
“Thiel has moved to Los Angeles.”
Wonder how long he sticks around there now that the asshat Gascon is the new DA.
“I ask you to walk with me. I ask you to join me on this journey…” …as I quickly turn LA into a trash heap like San Francisco (my handiwork!), although you guys are more than half way there, so shouldn’t take long!
LA has been a cesspit for over 30 years. I don’t think it can get much worse.
Thiel brought citizenship in NZ a few years ago.
I read that. Guys that rich can live anywhere.
Seems people like to poke at ca s liberal policies saying that is the cause of the problems. I know of a lot of conservatives here. My take on ca being expensive is normal big city problems. More people more infrastructure to keep up with. More people push housing price up. More strain on resources call for more regulation. Higher cost of living business have to raise wags to compete. Cities attract people of all varieties and walks of life. Which tends to make people more liberal in views. So businesses will leave cost will lower and the bay area will find a balance point. By that time everyone will be complaining about texas.
20 miles in from the coast, the rednecks rule. California has more of them than texas.
Plenty of Walmart People up in Lake County….
“rednecks” refer to poor working class whites…please refrain from being so elitist and racist.
“rednecks” refer to poor working class whites. Please refrain from be so elitist and racist.
AFAIK Tesla has no plans to completely leave CA. The public message is that the new plant will build the Tesla trucks….which might or might not be a total failure in terms of sales. I’d say it’s an uphill battle still in that market.
Tesla cars get ripped all the time by the short-side analysts that inhabit sites like ZH, but Telsa car owners are cultishly devoted to the brand. Everyone I know that has one loves it. I do understand that you can’t run forever with no earnings..in any business.
Tesla stock is no doubt WAY, WAY overvalued……it was at half the current price..but for now, fundamentals don’t seem to matter much.
I used to say that about Amazon, fwiw. I don’t say it about Amazon anymore.
The cars are freaking amazing. Body panels aren’t perfect, but you have to squint to see it, and that doesn’t effect the function. The 3s are the ultimate sleeper… I get ricerbois trying to race mine fairly often. I start off slow to give them hope, then at about 60mph punch the throttle and smoke them like a cheap cigar. You’d think they’d learn.
Only complaint I have is that they don’t FEEL fast. It’s just not the same without all the smoke and noise.
“Tesla stock is no doubt WAY, WAY overvalued…”
Well then why don’t you short it? Go on, I dare you! And Amazon too!
Just because I hate Trump doesn’t mean I’m stupid, my friend.lol.
I don’t like stocks at all in a world where investors sit on the edge of a razorblade, with endless bubbles one possibility, and a gut-wrenching series of deflationary events on the other, that could take it all away.
I only own tangible assets, held without undue leverage.
And fwiw, shorting any stock is fraught with risk….that’s for traders who understand how to hedge….not for investors.
Reports of the impending death of California are greatly exaggerated.
it is already dead. it is the most over-marketed state. all of my friends are talking about leaving the state but they want to become empty nesters before making the move to minimize disruption to their kids.
They should all leave now. Thanks for the space.
this virus is the final nail in the coffin for this place, wait till spring/summerX when quite a few homeowners realise their million dollar home (cira 2019), which they bought ~20 yrs ago for 1/2m, is now worth 1/4m ( if they could find a buyer )… & there’s still 10 more yrs on the original loan!
CA cities, SF, LA, SD benefit from being coast , and maritime shipping makes the coasts significantly cheaper to deliver cheap Chinese goods to. Texas is OK too, but Austin is not on the coast. So yeah, death of CA vastly exaggerated
How long before elon gets busted for weed.
Texas is a medical cannabis state although pretty restrictive so far
If Elon stays in Travis County, ZERO chance of a bust. Both the City of Austin and Travis County sheriffs have essentially stopped cannabis enforcement for an ounce or less (28 grams). Very soon Texas will wake the hell up and legalize cannabis for real, and we can all focus our attention on real problems instead of nonsense issues.
the biggest problem ca has is the wildfires. a few more years of these and we are going to have high incidences of lung diseases including lung cancer. and there is absolutely no plan to address that issue. most rich people wouldn’t mind paying the existing tax rate, but the threat of a “sticky” wealth tax (one that stays even after they leave the state) is prompting rich folks to depart. the state is so broke that sooner or later it’s going to happen.
Half the people I work with had their power shut down when those big winds were blowing. Enron looted the funds to maintain the power grid, and its getting more rickety every year.
Luckily Texas does not have a wild fire problem /sarc
From what I’ve seen, there isn’t anything there to burn.
Most people who smoke over a pack a day never develop lung cancer. No way wildfires are going to cause a surge in cases.
What is the status of California banning straws at restaurants? Have the EPA and CDC completed their joint cost-benefit analysis?
Still part of your fever dream.
nitrous…
LOL, good luck Elon! No one escapes the loving embrace of the CA FTB.
Big tech is going to have a big problem with the EU too.
The chance to tax hasn’t escaped Brussells and the take could be noticeable, soon. What impact on stock prices?
If you want to access the EU’s 400M plebs/serfs/peasants it will cost going forward. Either costs to consumers will gonup, or shareholder returns be hit or a little of both.
My idea would be a free trade digital global market place for the willing outside the tax and control of the EU, China, Russia.
Doubt there is a US leader willing or able to carry such an idea forward. Biden will kowtow & lack vision, same for VP.
San Francisco bans tobacco smoking inside apartments; pot smoking still allowed
Ha! They can’t ban pot in housing because it is considered a “medicine”. Big tobacco should have thought of that approach!
My thoughts exactly.
I don’t think that tobacco can make positive health claims.
I don’t think I’d call Thiel “conservative”. But otherwise, spot on article. Curiously, if CA if losing to TX/FL, how the heck can NY/NJ expect to compete?
“ I don’t think I’d call Thiel conservative”.
Why wouldn’t you?
Another socialist utopia down in flames.
Tesla has the most overvalued market cap I’ve ever seen. It’s bigger than the next 6 auto companies combined. Even though they represent about 1.5% of world auto sales. Toyota, the worlds biggest seller, presents about 12% by comparison. I get electric cars are the future, but every other car manufacturer makes them too and theirs are more reliable and affordable.
Often cities degrade after the people move away. The big CA cities are doing it in reverse. Such trendsetters!
“It’s bigger than the next 6 auto companies combined.”
What does that have to do with anything? Apple has a market cap 75x that of Motorola. What of it?
Motorola doesn’t sell 10x as many phones as Apple. Does it?
Furthermore, once a customer is locked into Apple, it is difficult for them to switch to another brand, so Apple’s market future market share will change slowly. With cars, while some people buy the same brand again and again, many people change brands from time to time, depending on costs and features.
Tesla is only profitable because it’s selling credits to other automakers. Otherwise the stock price is laughable.
Tesla picked a good spot to build…way out on the southeast side near the airport and the new 130 tollway. Traffic will be manageable, and with good access to the cheaper suburbs. I own a couple of houses on that side of town. Should be good for me.
At dinner last night the scuttlebutt was that he’s buying a house somewhere out around Lake Travis. I have not received any confirmation, as of yet. LOL.
It’s a schlep to drive from Lake Travis to Southeast Austin/Bergstrom/Del Valle. Traffic is a problem. Lakeway and Lake Travis H.S. area on RM 620 is the worst though. But man it’s really pretty.
Sounds good. It is a great area to live if not for the traffic and sky high housing costs. Perfect fix.