Chevron, one of America’s largest corporations, recently made headlines with its decision to relocate its headquarters from San Ramon, California, to Houston, Texas. This move is not just another routine corporate shuffle; it is a loud and clear message to high-tax states like California, which have long been suffering the economic consequences of their own policies. Chevron’s exit serves as a stark reminder that poor economic practices, overregulation, and high taxation have real consequences—and they are driving businesses and individuals away.
Chevron’s CEO, Mike Wirth, was refreshingly candid about the reasons behind this move. In a statement to The Wall Street Journal, Wirth pointed out that California’s policies have raised costs, hurt customers, and discouraged investment, ultimately stifling economic growth in the state. This is not just Chevron’s opinion; it’s a reflection of a broader trend where states with burdensome regulations and high taxes are losing their competitive edge, while states with more free market and business-friendly environments, like Texas, are thriving.
Chevron’s decision to relocate is also a testament to the power of favorable economic conditions. Texas, with its lower cost of living, no personal income tax, right to work and other free market policies, has become a beacon for companies looking to expand and thrive. The state’s recent $18 billion property tax cut, the largest in its history, shows its commitment to sending surplus dollars back to hardworking taxpayers. In contrast, California has continued to fall in economic rankings, recently sinking to 47th place for economic outlook in the 2024 edition of Rich States, Poor States. This is no surprise, given the state’s sky-high tax burden and oppressive regulatory environment, which stifles innovation and growth.
The differences between California and Texas could not be more pronounced. On one hand, Texas has embraced a model of low taxation, limited regulation, and fiscal responsibility. This approach has not only attracted businesses like Chevron but has also made Texas a top destination for individuals seeking a better economic future. In 2022 alone, Texas gained a net $10 billion in adjusted gross income from new residents, while Florida, another low-tax state, gained a staggering $35 billion. These figures highlight the power of pro-growth policies in attracting both businesses and individuals, as millions of Americans vote with their feet in search of economic opportunity.
On the other hand, California continues to pursue policies that drive businesses and residents away. Governor Gavin Newsom’s recent “margin penalty” law, aimed at limiting the profits of energy companies, is just one example of the state’s misguided approach. Rather than fostering a competitive business environment, California seems intent on punishing success through price fixing, an approach that has proven disastrous in socialist economies around the world.
Chevron’s departure should serve a wake-up call for California and other high-tax states. The movement of people and wealth across state lines is not just a coincidence—it’s a direct result of policy decisions. States with favorable economic policies are winning the battle for businesses and residents, while those that cling to outdated, punitive approaches are losing out.
For nearly two decades, the Rich States, Poor States report, which I co-author with economists Arthur Laffer and Stephen Moore, has tracked these trends. The data is clear: states that prioritize low taxes, limited regulation, and economic freedom are thriving, while those that do not are falling behind. Chevron’s move is just the latest example of this reality.
As our post pandemic world is increasingly mobile, businesses and individuals are no longer trapped by one state’s burdensome policies. They are free to seek out environments that support growth, innovation, and prosperity. California’s loss is Texas’s gain, and the lesson for policymakers across the country is simple: economic competitiveness matters.
Chevron’s relocation should serve as a cautionary tale for states that have neglected their economic competitiveness in favor of high taxes and overregulation. The stakes are high, and the consequences are real. States that fail to heed this warning risk losing not only businesses but also the hard-working individuals who drive economic growth.
For policymakers, the message is clear: it’s time to stop following the path of California and start embracing the policies that have made states like Texas economic powerhouses. The future of America’s economy depends on it.
Jonathan Williams is the executive vice president of policy and chief economist at the conservative American Legislative Exchange Council. Follow him on X at @TaxEconomist.
