SpaceX is one of the most exciting companies in the world. The brainchild of Elon Musk, the firm is already the leader in the commercial spaceflight industry. Despite not being a public firm, SpaceX could just as well be worth hundreds of billions.
It’s easy to say that SpaceX will play a significant role in mankind’s mission to conquer other planets. As a leader in its field, the company holds a lot of sway. So, it was partially a shock when SpaceX moved to Texas recently.
Welcome to the Lone Star State
SpaceX’s Texas move was solely due to a desire by its chief executive, Elon Musk. Now the world’s second-richest man, Musk has mainly gained notoriety for his sharp mind and willingness to make some seemingly outlandish decisions. Last year, the billionaire confirmed that he would move to Texas, leaving his California base behind.
In a Wall Street Journal article, Musk criticized California for becoming too complacent and making the environment too challenging for innovative companies to grow.
“If a team has been winning for too long they do tend to get a little complacent, a little entitled and then they don’t win the championship anymore,” Musk said. “California’s been winning for a long time. And I think they’re taking them for granted a little bit.”
Musk further confirmed that he would immediately move to Texas, focusing on a new Tesla Gigafactory and developing a building facility for SpaceX’s Starship vehicle.
Saving Money for Further Investments
When Musk announced the move, many were skeptical. California is the world’s tech capital, home to some of the largest tech companies in the world. Considering that Tesla and SpaceX tout themselves for their technology, it was improbable that they would move.
However, it is also easy to see why this move was necessary. California imposes the highest income taxes on its wealthiest individuals, while Texas has no personal income taxes. For Musk, who became the second-richest man last year, this was an incredible opportunity.
California currently imposes a 13.3 percent capital gains tax. On top of that, billionaires like Musk will need to pay federal capital gains taxes of 20 percent. By establishing Texas residency, Musk would be able to save capital gains taxes altogether. Apart from not imposing any income taxes, Texas is one of the only nine states in the U.S. without any capital gains tax requirements.
All in all, these tax savings will be incredible. Musk owns about $235 billion in Tesla shares. He would owe almost $20 billion to California if he sold all existing shares based on rough estimates. Moving to Texas would help him dodge this payment, saving him enough money to buy anything he wanted, including more breathing room to invest in SpaceX.
For now, SpaceX remains a private company, although it has been getting money from several funding rounds. Musk is a majority shareholder, making him liable for a lot of the company’s expenses. By moving to Texas, the billionaire has essentially ensured that he can maintain his dream of conquering space.
The Aftermath of the Move
Now that SpaceX’s Texas move is complete, it is worth checking how the company has fared thus far. Some believe that the state’s tax structure will help him have more wriggle room, while others claim that a lack of talent to build Musk’s dream could cause him to move back to California.
To be fair, it is a tad too early to judge how SpaceX has fared. Like most of the company’s processes, this Texas move will only yield any results in the long term. So, there is no basis for comparing how it has performed in its new home against what it could have been doing in its former base.
However, what is evident is that Musk is serious about growing his companies’ presence in the Lone Star State. In March, he expressed interest in converting Boca Chica Village, the city where SpaceX’s launch facility is located, into a city called “Starbase.”
Under state law, Judge Eddie Trevino Jr., the Cameron County Commissioner’s Court judge, will handle the incorporation process. In a statement, Trevino Jr. said that SpaceX had informed the court of the renaming endeavor in early March. While he emphasized the importance of abiding by the appropriate rules, Trevino Jr. didn’t shut the door on the idea of incorporating “Starbase.”
Musk has also revealed plans to donate $20 million to schools in Cameron County, and another $10 million to the city of Brownsville. The funds will go towards a “downtown revitalization” process, which is yet to be explained.
Breaking Ground Quickly
Beyond the donations, SpaceX has begun hiring in full force. The company published a job posting for an Automation & Controls Engineer last month, confirming that it is working quickly on a manufacturing plant in Austin. Per the posting, the firm is looking for candidates to build equipment for Starlink. For now, the candidates will need to work primarily out of SpaceX’s Los Angeles headquarters until the company can finish with the Austin plant.
As expected, Musk has also touted the need for talent in Texas, encouraging people to move there en masse.
With needs for Tesla and Musk’s The Boring Company also piling, the billionaire appears ready to make Texas his full-time home.