US businesses and citizens are moving to Texas like never before. In this article, we’ll look at the main reasons for this historical transformation.
The United States is the largest economy in the world and has been so for over a century. The US has a tradition of constant internal innovation and evolution to maintain its primate. In 1900, the country’s economic center was New York. Today, it’s California. Tomorrow, it will be Texas.
If California were an independent country, it would be the fifth-largest economy in the world. Texas, the second-richest state in the country, would be in ninth place. However, the gap between Texas and California is quickly closing.
Since the COVID pandemic, Texas’ population has grown at the expense of California. Increasingly more foreign and US businesses are relocating to the Lone-Star State, often moving away from California. Most recently, Elon Musk’s SpaceX moved out of Delaware to open a new headquarters in Texas.
But why Texas? What is so special about this state that is replacing California? Let’s find out.
Not just oil
By far the largest industry in Texas, larger than in any other US state, is energy. The vast majority of US oil production happens in Texas. After the Shale Revolution, the United States became the world’s largest producer of oil, with the largest reserves being underneath Texas’ soil.
While oil made Texas absurdly rich, it’s not the only major industry in the state. Not even regarding energy: Texas’ warm and windy climate makes it the best US state for renewable production as well.
Moreover, Texas used its position in the energy industry to attract new kinds of businesses. Texas is one of the leading US states in the manufacturing of pharmaceuticals and technology.
Texas is now the nation’s top exporter of technology, replacing California. Indeed, many California-based tech companies are relocating to Texas’ megalopolis like Austin, Houston, and Dallas.
Business-friendly environment
The oil industry allowed Texas to significantly decrease tax burdens to citizens and businesses alike.
For businesses specifically, Texas charges no franchise tax for firms earning less than $1.23 million, and a meager 0.75% above this margin. The rate is even lower at 0.375% for retail and wholesale businesses.
Apart from that, there are no federal income taxes in the state, neither for physical persons nor for businesses.
Diversity and politics
Historically a staunchly Republican state, the influx of new people and businesses is changing Texas’ political landscape, which in turn attracts even more migrants to the state. This change is made even more consequential by Texas’ proximity to Mexico.
The issue of illegal migration is considered a nationwide crisis by many Texan Republicans, but a political and economic opportunity by Democrats.
In the 2012 presidential elections, Democrats in Texas got 41.38% of the vote. In 2016, this number increased to 43.24%. In 2020, it was 46.48%.
Texas is one of the most diverse states in the US. A future switch to Democrats will radically change the political landscape of the entire nation, and therefore the entire world.
