California’s high costs and heavy regulations are pushing businesses to reconsider where they plant their flags. This article follows one company’s move from Los Angeles area to Round Rock, Texas, and explores the economic and policy reasons behind the shift, the tax debate heating up in Sacramento, and what this kind of relocation means for communities and workers left behind.
“Doing business in the state of California sucks,” Hil Davis, a California businessman, bluntly told reporters, and his words captured a sentiment many owners now feel. Davis, CEO of Digital Brands Group, decided to move his company headquarters more than 1,300 miles to Round Rock, just north of Austin, after years of weighing rising costs and legal risks. That single decision reflects a larger trend of companies chasing predictable policy and lower operating expenses.
The new Round Rock facility is roughly the same rent as the company’s old footprint in Vernon, California, but the calculus goes beyond monthly payments. Davis pointed to high living costs, long commutes, and the escalating price of doing business, including the expense and distraction of defending against lawsuits. “You start to add all those things up,” he said, and the picture becomes clear for executives who don’t want profit eaten by regulation and litigation.
State-level politics are only making things worse. A proposed one-time tax targeting billionaires has lit a fire under business owners and wealthy residents who worry about reliability of the tax code and whether Sacramento will keep reaching deeper into pockets. Supporters argue such levies fund vital services, but opponents — including many business leaders — warn that punitive tax moves prompt capital and people to leave rather than stay and invest.
IRS data already tells a blunt story: taxpayer and income migration is measurable and concentrated in key counties that once powered California’s tax base. Los Angeles County led the nation in net filer losses, and other populous counties followed with significant outflows. Those are not just numbers on a spreadsheet; they represent shrinking payrolls, fewer taxable incomes locally, and pressure on budgets that rely on a stable, growing tax base.
The fiscal consequences are real for schools, courts, and public safety when earners and employers decamp. Revenue that paid for local services can shrink, and replacing that lost base is politically difficult without making either painful cuts or tax hikes that risk accelerating the exit. From a Republican viewpoint, the sensible path is to make the state friendlier to enterprise and harder to justify punitive tax experiments that encourage relocation.
Davis does not expect a dramatic, overnight exodus from California, forecasting instead what he called a steady drain. “I don’t know if there’ll be, like, an explosion,” he said. “I just think it’ll be a constant leak.” That sort of slow erosion can be more damaging because it is harder to measure in real time and easier for policymakers to ignore until gaps appear in budgets and services.
Yet California retains undeniable strengths — Silicon Valley’s tech clusters and Los Angeles’s creative industries serve as anchors that attract talent and capital. Even so, companies like Digital Brands Group are choosing hybrid footprints: keeping some production in Los Angeles while moving headquarters and corporate functions to more business-friendly states. Those decisions underscore that proximity to talent matters, but predictability and costs matter too.
Round Rock appealed because it offered lower operating costs, a central shipping location for nationwide collegiate apparel distribution, and quicker permitting. Employees now face personal choices about relocation; some will follow, others will remain rooted in California. Digital Brands Group has already made its choice, and as policy debates continue in Sacramento, the broader trend will show whether California reforms to keep businesses or continues to push them toward lower-tax states.
Darnell Thompkins is a Canadian-born American and conservative opinion writer who brings a unique perspective to political and cultural discussions. Passionate about traditional values and individual freedoms, Darnell’s commentary reflects his commitment to fostering meaningful dialogue. When he’s not writing, he enjoys watching hockey and celebrating the sport that connects his Canadian roots with his American journey.