Texas Is Stealing California's Business Crown

California's title may not be safe for much longer...

The state has long been America's economic powerhouse. It has boasted one of the world's largest economies for years – if California were its own country, it would rank as the fourth biggest (not counting the U.S.).

Now, though, businesses and workers are leaving in droves. They're being pushed out by rising taxes, restrictive regulations, and a deteriorating business climate.

And they aren't just going anywhere... They're headed straight for Texas.

This shift has been building for years. As you'll see, Texas isn't just catching up – it's on track to surpass California entirely.

Texas is outgrowing California at a remarkable pace...

The latter was the undisputed leader in business growth for decades. It fostered America's tech industry from infancy and is still a strong tech hub today.

But the numbers show a worrying change for California. In 2023, Texas GDP grew an impressive 7.4%. The only state that grew faster was the much smaller North Dakota.

California's GDP only grew 2%... putting it in 35th place.

Texas is also rapidly outpacing California in population growth. It added almost 1.4 million new residents between 2020 and 2023, while California lost more than 570,000.

It's not just individuals making the move, either. Major corporations like Tesla (TSLA), Hewlett Packard Enterprise (HPE), and Charles Schwab (SCHW) have all shifted headquarters to Texas in recent years.

And it's all for one important reason...

Texas is embracing the same pro-business policies that once made California great...

That business-friendly climate makes all the difference... especially since California is moving in the opposite direction.

Texas has no state income tax. California imposes an additional 9% tax on middle-income earners.

Texas fosters a flexible labor market, allowing companies to hire and engage independent contractors freely.

Meanwhile, California's AB 5 law – which severely limits which types of workers qualify as independent contractors – has made that nearly impossible... stifling job opportunities and innovation.

Texas encourages business growth with minimal red tape. California is pushing businesses out with its higher taxes and extra regulatory hoops.

The list goes on... and on... and on.

In short, Texas is winning the same economic battle that California is slowly losing...

For investors, this shift isn't just about state policies. It's about where businesses are investing for the future.

Companies don't relocate their headquarters on a whim. They follow economic trends, tax incentives, and workforce availability.

And right now, that trend is pulling them toward Texas.

Economic leadership tends to shift based on policies, costs, and business climates. And as Texas continues to attract more companies and workers, it's creating an environment that will support faster growth in the years ahead.

Investors should take a closer look at companies making major expansions in Texas (and similar low-regulation, low-tax states).

These businesses are positioning themselves to benefit from better operating conditions in the long run.

Wishing you love, joy, and peace,

Joel
February 28, 2025