Grumet: Was Elon Musk fond of Texas or just our tax breaks?

Carping on California is the unofficial pastime of Texas, especially among GOP leaders who relish our state’s contrasts with the woes of the Left Coast.

Sure, the stampede of California transplants helped push Austin’s housing prices into the stratosphere — and contributed to the long-winded laments of late that Austin Isn’t What It Used To Be. But on some level, the arrival of all these Californians fueled a smug sense that Texas was doing something right.

Nowhere was that Lone Star State schadenfreude thicker than with each announcement that the World’s Second Richest Human Elon Musk was moving more pieces of his California-based business empire to Texas, including the massive Gigafactory built outside Austin, where Musk relocated Tesla's headquarters in 2021.

We gained tons of desirable tech jobs, even at the cost of sizable property tax rebates.

And importantly: We were sticking it to California.

“Elon Musk knows what’s up,” Gov. Greg Abbott tweeted in January 2021, rejecting the notion that Musk’s ilk of relocating tech bros would turn Texas blue. “He consistently makes comments … that push back against liberal political correctness. He’s a true believer in freedom & less government.”

Yes! He’s one of us!

Or is he?

Last week, Musk was back in Palo Alto, all smiles with California Gov. Gavin Newsom — the very embodiment of a high-tax, high-regulatory state of the woke — as the two announced Tesla was establishing its global engineering headquarters there.

Not Texas.

Economically speaking, it’s hard to tell how consequential that is. As my American-Statesman colleague Kara Carlson rightly noted, large swaths of Musklandia remain in Texas, including Tesla’s corporate headquarters. At the same time, Tesla has maintained a significant California footprint all along. It’s unclear how many engineering jobs are moving anywhere.

But the symbolism.

In recent years, industry analysts described Musk’s moves to Texas as “a huge feather in the cap for Austin,” and Abbott touted them as proof “the Lone Star State is the land of opportunity and innovation.”

Moreover, Abbott told CNBC in September 2021 that “Elon had to get out of California because, in part, of the social policies in California.”

Not even a week after Abbott gave his latest State of the State address on the “Texas of Tomorrow,” though, Musk was back in California, saying, “We're going to build the future here.”

In truth, the billionaire has enough business opportunities to go around. Our state’s mistake was reading anything into Musk’s motives beyond his bottom line.

California has the highest income tax rates in the country. Texas, famously, has no personal income tax.

Musk’s most recent compensation package with Tesla, approved in 2018, provided nearly all of his pay in the form of lucrative stock options as the company hit certain targets.

The first tranche of those stock options became available to Musk in 2020 — the same year he announced he had moved his primary residence to Texas. Musk received the last block of those stock options last month.

All told, those stock options were expected to net Musk more than $55 billion. About $7 billion of that would have gone to state income taxes had he stayed in California, according to reporting by CNBC.

I’m sure Musk was irked by California’s regulatory environment and “liberal political correctness.” But he had 7 billion reasons to move to Texas.

Since purchasing Twitter last year, however, Musk has been spending more time near the San Francisco home base of the social media platform. Abbott and others failed to persuade Musk to move Twitter to Texas. Instead, Musk is shifting a piece of his orbit farther west.

Something about California makes that worth his while.

It’s unclear whether the Golden State offered any financial incentives to land Tesla’s engineering headquarters in Palo Alto, but it’s hard to imagine it didn’t. Musk knows the excitement and investment that follows any Tesla operation. He doesn’t show up for free.

And that’s really the bottom line. Musk will always take the best deal, whether that’s in Texas or California. It’s not a triumph of one state’s ideology over another. It’s not political. It’s just business.

Grumet is the Statesman’s Metro columnist. Her column, ATX in Context, contains her opinions. Share yours via email at bgrumet@statesman.com or via Twitter at @bgrumet. Find her previous work at statesman.com/news/columns.

This article originally appeared on Austin American-Statesman: Was Elon Musk fond of Texas or just our tax breaks?