"To be clear we will be continuing to expand our activities in California," Musk said. "Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory it's jammed."
But, he added, "It's tough for people to afford houses, and people have to come in from far away....There's a limit to how big you can scale in the Bay Area."
Do you have any idea what housing costs in the bay area though? We can compare between the zipcodes of Gigafactory Texas and Fremont. According to Redfin the median sale price for 78725 (Austin) is $362k, compared to $1.225 million for 94538 (Fremont). That's more than 3x the price. Compared to California it's definitely affordable.
I mean, to be fair, 78725 is effectively the middle of nowhere in Austin. It makes sense if Musk's goal was to choose a fairly undeveloped exurb, but the gigafactory is as close to Manor and Webberville as it is to central Austin.
I know Fremont is suburban, but it's a well incorporated suburb to both SF, Oakland and San Jose. 78725 is on the opposite side of Austin from most of the fancy neighborhoods.
Google maps says downtown Austin to Giga Texas is 17 miles, 24 minutes. I don't know what traffic is like in Austin but I imagine it's not nearly as bad as the bay area. I think a 25-30 min commute is pretty reasonable and most people would happily take that for much cheaper housing.
The big difference is that in Austin you have the option to commute a bit for much cheaper housing. But in the bay area you could be commuting over an hour each way and the houses will still be over $1 million.
Traffic in Austin is insane. Legit insane. Definitely comparable to the Bay Area if not worse.
And there is absolutely no transit alternative comparable to BART. There is a morning and evening train, but it's really only effective if you live and work exactly on the stops.
I lived in CA my whole life, including the last 10 years in the Bay Area, before moving to Austin a year ago. I can’t for the life of me understand what you’re talking about.
I-35 is bad, that’s about it. The freeways around the rest of Austin are still moving even around rush hour. None of those hold a candle to the Bay Bridge on a Friday afternoon, not even remotely close to as bad.
The reason is that there is no alternative. You'd be a fool to take the Bay Bridge on a Friday afternoon. BART is there, and any sensible person would take it. In Austin, when traffic is fucked, you're just fucked, especially if you have to cross the river.
you moved during COVID times where most people still not on roads. I guess when things become normal, you would see actual issue. Just wait for few more years before you can start complaining the heat, traffic & cost of living. Especially if you want to live in an area with good schools!
that data uses "congestion" which is the ratio of the worst traffic time to the best traffic time. If you look at average commute times austin is way down on the list.
Not because I know anything about Texas or California, or about traffic as a field, but because any data set - especially a list - can be used to present an argument and then be refuted due to "this detail". I see this on HN a lot and I believe that it has made me much less likely to be misled by someone toting data.
Again... LA has a surprisingly extensive subway system. NYC, SF, Miami, DC, and Chicago all have robust public transit. Even San Jose and Seattle have non-negligible transit alternatives.
Austin has essentially nothing, the train they built is legitimately the dumbest, cheapest option that was offered at the time, though they are building dense housing along it now. People often choose which side of the river to live on because of traffic. You're simply not going to convince me that Austin isn't one of the worst cities to commute in, because unless you want to bike in 100ºF heat, you literally have no choice but to engage in it, especially if you have to cross the river.
Have you lived in these places? I mean, come on. Miami does not have robust public transit. You can't possibly call Metrorail robust. Next you'll tell me Atlanta has robust public transit too.
Yes Miami has much worse and much more dangerous traffic than SF. The number of accidents on I-95 is insane. Meanwhile many people in the Bay Area just take BART or walk to work which is essentially impossible in Miami.
North-South traffic in Austin is the big problem. Because Austin stretches from North to South-- from the suburb of Kyle in the South, or the suburb of Georgetown to the North.
East-West commuting is much easier. The wise strategy is to live East/West of town, not North/South.
Seattle's public transportation is poorly connected and confused at best. Mismanaged and terrible at worst. It seems like a ponzi scheme masquerading as a public transportation system, at times. There's a demand for it, which is the sad truth of the situation.
Seattle could be better connected, but it isn’t that bad. If you are going downtown, you can get something, even something lateral Ballard to Bellevue requires just one connection.
As long as Seattle is your source or destination, Seattle's transit is pretty okay.
If you dare go Eastside; or, worse, need to go from like Renton to Totem Lake; or Redmond to somewhere that isn't the the center of Bellevue, you're just never going to get there in a reasonable amount of time.
these are at least all getting addressed with the massive upgrades that are ongoing. Local Eastside transit will be much better once East Link is opened and bus hours wasted on I-90 are redeployed to serve local areas.
Sure, but the east side is fairly anti transit compared to the west side. Look at the drama Bellevue put everyone through for the new link route from Seattle to Redmond via Mercer island.
Also, Renton to Totem Lake should only be one connection given a weird sound transit airport route (590?) from West Seattle to Bellevue that goes through Renton.
They came in at #13 on that list. While traffic's bad in Boston, commuting via public transit is actually a viable alternative. It's very dense and has a solid commuter rail system in addition to an expansive (if aging) subway system. It's also very bike / pedestrian friendly.
That’s true, but Boston has a huge public transit network. My commute, 14 miles from a suburb to downtown, is a 14 minute train ride. Seattle is getting there with the link but it’s still decades away from being even close to what Boston has
As someone that lived in the Bay Area for over 20 years and is now living near Austin, traffic in Austin is nowhere near close to that of the Bay Area. I live 25 miles outside Austin and be downtown in < 40 minutes during rush hour.
As a transplant from Southern CA to TX 4 years ago I can honestly say that traffic in Austin is barely worth mentioning when compared to traffic in Orange County and Los Angeles. In Orange County, I would daily spend hours in a car traveling at average speeds that I could beat on my bicycle. Traffic jams that are 15-20 miles long on 7 lane highways. Even the express lanes would back up to the entrances. People drive over islands and fill up back streets. Anyone who does a daily on the 91 and the 55 from Corona to Irvine can back me up. 8 years ago it was TERRIBLE.
I don't know about the Bay Area, maybe they are better because of reliable transit, but Austin is nowhere near the So. Cal area when it comes to traffic.
Source: while working as a transport planning consultant, I had a private client in Austin. He flew our team around the city in a helicopter, saying "see all this traffic? It's insane!". I'd just flown in from New Delhi. By the standards I was accustomed to, I didn't see any traffic at all.
Certainly Austin does have a need for much better public transit -- and if being upset about traffic is a catalyst for making that investment, then that's great! -- but in that respect it's no different to most other major metropolitan centers in the US.
If you visit Amsterdam or Copenhagen, you know what I mean. The happiness of the people, clear streets and less noice is something you can't explain, but it's better what you can imagine.
Based on my experience dealing with offices of software engineers versus actual corporate HQs for companies that aren't purely software, it really won't matter.
Employees at corporate HQ's tend to want to have houses in the burbs. They tend to be in there 30s and up as well. There is no shortage of suburban real estate in the vicinity of the gigafactory. A minority of employees will live in downtown Austin and hate their life due to the horrific commute out of there.
If you ever do come visit Austin, learn to love I-35.
It's a weird mix of nascar and bumper cars, but also rolling parking lot.
Edit: It's the main way you'll go North/South here. Often times I'll double the commute taking side streets just to avoid 35 - depends on the day/time/personal interest in sport driving.
This is genuinely hilarious. Perhaps this is true at midnight, or during the early days of the pandemic. 17 miles in Austin is well over an hour at peak commuting times.
> And yes, we still hate all the jokers coming in from California who are gladly dropping millions of bucks to buy up houses that just a few years ago were only worth a few hundred thousand.
> Thanks for visiting, but Austin is full. Yankee go home, please.
This NIMBY mentality is why Austin is rapidly catching up to California in housing prices. The advantage is not going to last long at this rate.
(And before you start, I'm like 4th generation native Texan.)
I mean, I haven't lived in Austin in a decade, and I know the east side neighborhoods are becoming more desireable, but my point is that it's an isolated area. You've got 71 and MLK as your only access to central Austin, so you're extremely limited in commuting. Any further development will quickly make the current Austin traffic paradigm problematic for anyone who isn't living on the east side. 130 does make pfugerville and south austin accessible though, but it's a toll road.
I'm not sure I'd agree with some of these people here that Austin is worse than SF. I've driven in both within the past 6 months.
But geographically speaking, Austin is pretty awful. I35 is basically the in/out for all of the commuters from the north and south. There are some tollroads but Austin has had trouble getting people to use them because they were so expensive. They even raised the speed limit to 85 as an incentive and still enough folks wouldn't pay the astronomical rates! Now, for people making software engineer salaries, they could afford it, but they likely won't be enough to continue investment in the needed timeframe.
Apple, Tesla, etc, so many huge names are moving to Austin and the city just wasn't built for it. They have enough room to make stuff happen, but construction takes money and political will. Austin is a blue city, but we all know money leans red, especially when it comes to increased taxes to pay for city projects. Can you imagine the amount of money that would need to be spent to imminent domain a subdivision for a new freeway? I can see the speculative investment purchases already! Hold them up in lawsuits for a few years while the housing prices get pumped to kingdom come.
Now, I live up the road in quaint little ole Dallas, so what do I know? I've watched the price of housing increase by 30% in a couple years. It's absolutely insane. Lucky for DFW, it has had more of a focus on transportation development across the entire metroplex a lot longer than Austin, so even during rush hour you can get all the way into downtown from the far suburbs in an hour. Granted, this is also made possible by an insane amount of investment in toll roads, but they've been strategically built through the wealthiest neighborhoods, forcing residents to take them just to leave home. (Obviously not required, but the city knew they had money to burn.)
DFW also has the second(?) largest airport in the US, processing an insane amount of cargo and thus we have highways to match. DFW boasts 4 professional sports teams, a major backbone of financial services, a thriving entertainment scene, and still plenty of room to expand.
DFW still lacks around public transportation, but if you are willing to pony up the cash for a place in the city, it's certainly possible to commute in a reasonable amount of time. You will absolutely need a car still for weekend activities unless you want to ride a bus for 3 hours one way.
Californian's, if you're going to move to Texas, go fill up Austin first before I buy a house next year, but then when you realize it's too crowded down there, you can come visit the state fair (going on now)!
I mean are you seriously comparing affordability of Austin to the bay area? My sense is that you have only lived in Austin and thus don't know how squeezed things are in the bay area. Not trying to be rude but just trying to point out how much more affordable Austin is relative to the bay area.
I've lived in Kansas City, DC, Chicago, New York, San Francisco and Austin.
Is Austin cheaper than San Francisco? Yes.
Would I classify Austin as "affordable"?
I would have two years ago, when my wife and I were first looking to move here. That was the whole reason we began the process.
But, it's gotten insane.
We were going to wait a year, after renting, before we bought. Prices here were rising, we bought within six months so we wouldn't get priced out of our neighborhood.
On my street, I have neighbors who bought literally a year before me, who live in basically the same home (1970s subdivision so all the houses are basically templates) that paid 40% less than we did.
My neighbors could not afford to buy their current homes at the prices they're currently selling for. They cannot afford to buy similar homes in similar neighborhoods.
Dell has excellent value for money in their monitors. And has for more than 15 years. Line after line is consistently rated by a wide variety of computer reviewers as top quartile. Yes, you can argue they do not directly manufacture, but the end product is reliable and high quality.
It was the example used and the list from that website its tough to tell which companies were satellite offices vs which were corporate/research HQ.
Not trying to belittle Austin - I know they have a tech scene - and I know every city is trying to capitalize on marketing their city as the next silicon valley (which is such a ridiculous thing to do for an incredibly long list of reasons).
I think Apple’s campus here is already bigger than anything they’ve got anywhere else, short of the giant UFO in Cupertino, and they’re still planning on expanding.
Amazon is here, and again they have a number of buildings in the Domain area. I think it might be their second or third largest site, behind HQ and possibly HQ2.
Of course Dell is here. Google doesn’t have much of a presence, yet.
There are lots of other companies that have massive presence here in Austin. Tesla is highly unlikely to be the biggest.
How many "Dellionaires" have gone on to found new startups or even become angel investors/LP's? I can only think of a couple. Overall, Dell's innovations were supply chain and direct mail, not technology.
> I mean are you seriously comparing affordability of Austin to the bay area?
How is the sprawl in Austin compared to the Bay Area?
A lot of times land/housing is cheap/er, but you 'pay' for that will long/er commutes in bad traffic. And often with few/no options for public transit.
I'd be careful about directly comparing prices, real estate taxes (by rate) in Texas are significantly higher than in California. They might be overall lower given that the real estate prices are cheaper, but Texas is #6 in the country for real estate taxes while California is #34[1].
> I'd be careful about directly comparing prices, real estate taxes (by rate) in Texas are significantly higher than in California.
The two are directly linked, so this makes sense. A higher property tax means that the future annual rent (real rent if you're a landlord, imputed rent if you're a owner-occupier) you get from property will be reduced, so the capitalized present value will decrease correspondingly.
I'd be careful about drawing the conclusion about rent shifting on that paper you linked, which really just says Carroll and Yinger's 1994 paper was right. Carroll and Yinger's paper is not unchallenged in economics (there are so very, very many papers on the problem), and it's entire line of reasoning is basically:
1. Property owners make a lot of money and own a lot of property.
2. When you increase property taxes, people who own a lot of property pay a majority of that increase.
3. Rent prices don't immediately increase 1:1 when property taxes rise, based on one data set.
Basically, property taxes are mostly paid by people who own property. Most property is lived in by the owner. So property taxes aren't regressive, since rich people end up paying the majority share.
People have been trying to create a model for the impact of rent shifting since the 60s. No one has a good model yet. It's hard to model.
If I sign a lease for 2000/mo, and the state increases property tax on the owner, the owner can't immediately increase my rent. Rents increases are generally governed by local laws. But over time, they can raise it, and it can be reset when the current occupants leave.
So an owner's profit margin takes a hit when property taxes rise, and renters bare a smaller percent of the burden of the new tax than the absolute amount raised in the short term. Long term, renter's are still covering the owner's total cost of that property, otherwise the owner would be losing money on the property – which, if that were prevalent business practice, we wouldn't have that many landlords.
Not one to one though, it sounds like you know what you're talking about but the markets are of course decoupled. Home owners would like to pass along the entirety of their property tax, but whether they can or not will depend on the rental market, possibly renters can't afford the extra amount of the property tax and so adding it all makes the rentals unattractive and so the homeowner can only pass on some of the tax.
It’s true that landlords don’t directly pass property taxes down; this is part of why taxes on rent are occasionally floated as a way to make being a landlord less profitable.
But, definitionally your rent must cover the mortgage and property tax of the property you occupy, plus profit. If you rent is less than property tax and mortgage, the land lord is underwater and will soon sell to someone else who will charge more or evict you for remodeling.
It must not. "Being underwater" is a state that describes the value of your asset vs the loan. If your house is worth more than the mortgage balance then you cannot be underwater even if you don't rent it at all.
In the current situation, when the realty appreciates at >10% per year (in Austin, at least) it's not a very smart decision to sell or renovate the house if you cannot find a tenant willing to cover all your expenses.
For example: Zillow shows my house appreciating 10K per month, my mortgage+tax+insurance is 3K, assuming Zillow is in the right ballpark, it makes sense for me to keep the house even if I can't find tenants for 3K (similar houses in the area used to rent for 2K-3K last time I've checked).
Yes, your landlord can rent out for a loss when the house is gaining double digit percentages per year, assuming they’re well capitalized[0]. But let’s be honest, how long can houses gain 10% per year? And how often do you really think landlords rent at a loss in such hot real estate markets?
Under less insane circumstances, a land lord who is charging less for rent than the house costs to own is going broke. As a general rule most land lords rent to make a profit, and therefore won’t charge rent below the cost of ownership.
0 - A poorly capitalized land lord will still go broke in this circumstance, since they’ll eventually fail to pay their mortgage without refinancing.
10% per year is not the threshold, as long as the cap gains are more than expenses it's profitable to lease at any amount >= 0. Before I moved to Austin I used to live in a ~1.5M house in Los Angeles, paying ~2K rent for 10 years or so.
It's not relevant to the current discussion though. Right now rents are lower than mortgages in general so the assertion that the tenant pays all landlord's expenses is demonstrably false.
I think you’re making a lot of implicit assumptions here. For example, in this discussion there is no guarantee that the average current mortgage is the same as the mortgage held by the current landlord charging the prevailing rent. In my experience it’s pretty typical for rented houses to not be recently purchased.
If you have evidence that it’s the norm for landlords to rent below their operating costs, by all means provide it. But from what you’ve provided so far, I am unconvinced.
I gave you an example of my house, have not I? If I were interested in renting it I would not be "underwater" and any non-negative rent would be better for me than selling/renovating/keeping it off market. Note that I am not making a statement about every house, to rebut your assertion that all renters pay no less than the landlord's taxes + mortgage + insurance it's enough to show some (even one) counter example and not to prove that all or, even, typical renter does not do so. There are certainly rental properties that make profit on rent but I have few friends who rent their houses at less than their own expenses because they just cannot find tenants willing to pay more.
Seeing how in general rents had been lower than mortgage for quite a while it's sane to assume that I am not an owner of a unique house with a selected group of friends who are in this completely extreme situation.
I do not find your house to be persuasive for larger trends, no. I responded to the other bit already.
> Note that I am not making a statement about every house, to rebut your assertion that all renters pay no less than the landlord's taxes + mortgage + insurance it's enough to show some (even one) counter example and not to prove that all or, even, typical renter does not do so.
Don’t be a pedant, we were clearly talking about the typical renter.
It was not clear to me, I thought you made a general assertion about the economics of real estate which is false on its face. I am not equipped to talk about typical renters since I don't have data. All I can find is the Census statistics showing that average national rent is less than mortgage:
https://www.census.gov/quickfacts/fact/table/US/HSG860219
I don't think I made up the idea that landlords generally don't lose money renting their property. Higher taxes might reduce their profits in a competitive market, but renters are still paying the property tax for the landlord. Tax incidence theory also leans pretty heavily on the assumption that there's healthy competition in the rental market. In most major cities that's a very unsafe assumption.
Taxes for that home in TX would be equivalent to a $1.8M+ home in CA, though (and raise every year with the market), so it's not as simple as comparison. The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA.
> The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA.
Are you talking about paying property taxes via an escrow account that your mortgage lender takes care of for you? That's not your "mortgage payment", which is a function of your loan size, interest rate, and term, and nothing more. The monthly mortgage payment (assuming same term and interest rate) is the same in CA and TX for the same amount of loan.
(I guess we could also talk about things like PMI, but that won't raise your payment by all that much.)
Property taxes might be quite a bit higher in TX, but I'm not convinced a $900k home in TX is the equivalent to a $1.2-1.3M home in CA. I would expect that's closer to $1.7-2M, and then the property tax amounts end up being not that different.
Not to mention that the property taxes in TX are not charged on the price but on the assessed value. It's same in CA, I imagine, but the assessed value in CA is >= price, while in TX the price is not disclosed to the government and the assessment lags the market price by quite a lot.
Not necessarily true based on the locality. In Dallas, for example, assessed value will (usually, unless you buy in all-cash off-public-market) be set to your market price when you buy it.
From there tax basis more or less tracks market value, but it’s possible to protest the assessor to keep it below market value (though it’s time intensive and requires in-person hearings).
To get ahead of any artificial attempts at deflating tax basis, Dallas also maintains a comprehensive public lot value database that assigns a land value for tax purposes based on census tract (initially likely a product of redlining, but now based on average census tract market value) — so, similar to a pure land value tax, even if you’re sitting on an unimproved piece of land, you’ll still be taxed similar to the average home in the neighborhood, which has the effect of setting a tax floor.
Austin is similar, I believe. Most cities have to, as aside from sales tax property tax is their only source of revenue, because any sort of income tax is constitutionally banned.
Non-disclousre is the state law in Texas, so unless you report it yourself, how does the county know what did you pay in Dallas? I've looked on Zillow and some houses in Dallas do seem to show price per sq. foot on sales (no total price though) and some don't. Same with Austin, I figure if the price was the public record it would have been shown as same as it shows on houses in CA - the price of the house on every time it's sold so I doubt what you say is true. Perhaps you meant it might be set to the listing price?
I talked to several Tesla and former Tesla folks that will probably relocate because of this, and the say is that since Austin in less NIMBY than the Bay Area new housing will get built and prices will go down. It's a more complex bet than just "we move there because houses are affordable now".
It’s a no brainer, my company offered to let me move out of CA a few years ago.
My utilities are 50% cheaper and more reliable, crime is lower, the air quality is better, and I bought a new construction with 10G Fiber Internet (You will never get this in California due to failing infrastructure). I miss is the arts, culture, and nightlife, but that was wiped out by government-enacted COVID restrictions so there are few redeeming reasons to stay. Tesla should be a good lesson that when you put political idealism above the basic needs of your residents (Safety, infrastructure, housing), people leave.
I don’t know where in CA you were… But here in Oakland I have the option for 10G fiber (albeit the landlord only wired my actual apartment for 1G ethernet, but the fiber is like 50 feet from my door). Utilities are extremely low… Far lower than I had to deal with winter and summers in the US South. And at least so far, this year air quality hasn’t yet entered in to the toxic level.
In Austin, you’re lucky to get 1G anywhere. If Google Fiber has already laid down cable news provided service, then you will not be surprised to find that Spectrum and AT&T both are surprisingly competitive it’s each other.
Otherwise, you get what little you can get and you just have to be happy with DSL because it’s still better than what you can effectively get with Spectrum, since you’re sharing that with all your 500 closest neighbors and you still have to put up with outages and throttling and being treated like trash from the “cable guy” installers who wouldn’t understand concepts like bend radius if you broke their arm at the right distances and showed them how the glass fiber also breaks when it is bent too tightly.
In the entire US, you are lucky to get fiber at all. Almost all people have a choice of only garbage asymmetric over subscribed coaxial cable with no other choice. A significant portion do not even have that. So few have fiber, that I disqualified 90%+ of the houses that came up in my searches when I was searching for a home.
People may be leaving but I don’t think it will start to change anything about CA anytime soon. It could lose 25% of its population and still have more than the next most populated state (TX). That’s ten million people—nearly the entirety of the LA metro area.
> I miss is the arts, culture, and nightlife, but that was wiped out by government-enacted COVID restrictions so there are few redeeming reasons to stay.
Isn't that the case pretty much everywhere, though? These things will come back in CA just as they will everywhere else, barring catastrophic economic collapse.
Its not even true, last weekend I went to a watercolor painting show featuring international artists. Been going out for dinner (not much of a drinker), the late night "downtown" area in my town is fully open. Tourists were back during summer. Activities are all back to normal. Concerts are going on, I went to one a couple weeks ago. There is one I really want to go to in the bay area too :( but no time.
Just clueless people on the internet that don't know what they're talking about. Probably because there is nothing else to do in texas besides be mad about things lol.
Every time I hear someone rail against California, I think of that scene in Mad Men when Don Draper tells Michael Ginsberg: "I don't think about you at all"
> new construction with 10G Fiber Internet (You will never get this in California due to failing infrastructure)
I've had 10g fiber in three places in San Francisco and almost moved to a house in Cupertino that had 10g fiber. Not sure about the rest of California honestly.
The east part of Austin where Tesla is located is still underpopulated compared to most of Travis county, so there's room for a lot of housing to be built out that way. Connectivity from there to central Austin isn't too bad, since that's the direction of the airport and Houston.
Yeah that's what they said! I am not saying it's not a sound bet, honestly I hope it goes well. The thing is that nothing indicates that the new housing built there will not be sold at prices that flatten the curve. Yeah supply and demand and all that, but there will be more demand and the real estate market is good a limiting itself to the supply that keeps the prices increasing just about right for them to make a quick buck selling to a captive audience.
The curve is a cliff. Prices have already doubled and tripled at least once or twice, and that’s just within the last couple of years.
There’s no new inventory being built, and there won’t be a significant amount of new inventory built any time soon, because Texas is the most terrified state in the country of all the Mexicans coming across the border to take all the jobs.
They’ll spend billions of dollars to protect that border, but nothing to build new housing for people moving to the state.
That's funny. Yesterday on Marketplace there was a piece about the city of Austin trying to build a $300k low income home in an empty lot in a rich neighborhood. The neighbors freaked out and sued to stop it. It is now a half finished foundation buried in weeds. Sounds pretty NIMBY to me.
It may be as NIMBY in some ways but the effects haven't kicked in yet (and probably won't given size, competition, and property tax laws). Look at the options available for a family making 80k in these two cities. They aren't even the same magnitude.
That comparison is ridiculous, have you been to Palo Alto? It's a mansion neighborhood like Atherton. A better comparison would be with San Jose or San Mateo that are like, normal cities. Still way more expensive than Austin but it's nowhere near the price of Palo Alto or Atherton.
I live in Palo Alto and love zillowing random houses on my walk to Starbucks. Record for most expensive town house on a normal residential street is $19m. It’s insane.
I think that's fair but the nonetheless the only houses on here in San Mateo for under 600k are about 600sq ft. Even 1200sqft homes are 1M+ Where do you think married mid-level engineers are going to live?
For 500k in Austin you can choose between brand new 1300 sqft homes or older 2500 sqft homes.
More conservative areas -- and Austin is more conservative than the bay area, even if it's relatively blue for Texas -- tend to at least allow building more housing outward, even if they don't allow building more densely in already-developed areas.
In 2019, San Francisco housing grew in total by 4,850 units, which was an increase of 81%! over 2018.
By comparison, Austin permitted 8600 multi-family units in 2018 alone. That doesn't include single family detached, which averages another 2800 a year.
Prices will only go down in Texas when people quit moving here because they think the RE is cheap. Construction never stops here and prices still go up.
I wonder what they’ll do during the next power outage that lasts several days?
Or is Tesla going to give each of them 25kw solar arrays plus three Powerwalls, and a backup natural gas generator for when the sun doesn’t come out in January or February and ERCOT decides they’re going to just go into rolling blackout mode because they are unable to sniff their own butts?
I don't think we really need to localize this conversation as nowhere can economically manage a large exodus of people from California's 40,000,000 population.
The only thing to remember is that Californians can afford the new area's current housing prices and a decade's worth of price increases.
Influx of Californians raises the local housing prices because they can pay a lot more after selling in California. This has happened and continues to happen in metro Denver and Boise.
Yes, correct. Or just having already budgeted for the existing rental prices, or have savings from when their annual compensation was high whether they get to keep that compensation or not in the new place.
I simply don’t believe SFChronicle here. I live in Texas and I see plenty of California plates on the road. The realtor I work with says Californians are flooding the market with cash. They’re offering 10’s of thousands of dollars over asking price and winning out over local offers.
I suspect that maybe not many are coming from San Francisco itself, which is only a tiny part of the Bay Area. And maybe not that many are coming from the greater Bay Area. Maybe they’re coming from other parts of California that also has very high cost of housing, like LA.
Agreed. Even in North Carolina I’ve been seeing quite a few CA plates. After we moved in to our neighborhood I noticed another 5/6 parked in different driveways when out on walks. Driving to Cary you see tons of them on the road. People are definitely leaving in a significant number.
Not matching the anecdotes leads me to believe the analysis is probably lacking something.
“The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right.” -Jeff Bezos
Being data driven is not necessarily a bad thing, but the design of the study, the kinds of data collected, and all the other factors that go into how the data is measured need to be considered too.
This article about there being no “Californian Exodus” just doesn’t seem true, much in the same way I discount all those reports that say something along the line of “No, crime is actually down in the Bay Area”. Despite people living there saying it’s gotten way worse. The answer probably lies in changing what gets counted as “a crime”, coupled with police not responding to things they used to report, and citizens feeling like it is futile to call the police. But the data would paint the picture that crime is objectively down. But when you apply some other analysis you can see the conclusion is flawed.
USPS isnt the canonical whole picture either though, have you talked to actual humans in your physical friend group to extrapolate what others did last year?
Many people moved their nexus to their parents house while physically going elsewhere with the uncertainty. USPS data has no way of accounting for that if the physical human being did not tell USPS to forward mail to where they physically were.
Anecdotes are a signal to say “look over there and see where the hypothesis goes”, if people havent done that and simply invalidate anecdotes because meme, then the answer is not known
And for many questions the data doesn’t exist, just because someone elevated USPS change of address filings as a signal doesn’t mean it is the strongest
get California moving and those emigrants could turn every single state blue starting with every swing county, worth mentioning as the opposite is not true for the opposition party, from a math and distinctly unpartisan perspective.
That is a massive assumption. Plus with continuous growth in home value their tax bill will also keep ballooning, unlike in California where prop 13 shields homeowners from this.
> Lots of people will be commuting from Round Rock.
By the time Tesla reaches critical mass in Austin, Project Connect may very well be on its way to construction of the Orange and Blue lines. This establishes a light rail train from North Austin to the Airport. Given Round Rock is north of Austin, and the Airport is nearly adjacent to the Tesla complex, this could be a suitable option for commuters. Or easily extended with additional investment.
Though, for white collar jobs, I would expect multiple Tesla offices in Austin to work around this problem. They already have office space leased on opposite ends of the city.
Tech Ridge is a great location that is accessible from Round Rock and Cedar Park. Apple, GE, 3M, Home Depot, and Blue Apron all have offices in this area.
I moved from Chicago, so my definition of bad traffic is fairly skewed. It hasn't been that bad here, but I'm sure some of that is the transition to WFH for a lot of the people who would traditionally have driven into downtown.
Chicago traffic reminds me of LA. It's sprawling, long distances, that crawls bumper to bumper. The SF Bay area's traffic was crawling at all hours of the day and night, but it's shorter distances with many exits. NYC traffic is crazy, but there are plenty of alternatives.
I think all metro traffic situations are relative, because no one likes any amount of traffic.
According to a friend that moved to Austin last year, yeah traffic is a problem but in downtown Austin in new buildings it's even worse. Sewage is a problem.
I wouldn't trust this. Speaking as a resident of Austin, there's several OG Austinites that are mad about all the change. Sounds like FUD to me. Point to a source please!
I won't repeat what he said as it's as sourceless as what I said before, but it's a problem, builders complain about it, the infrastructure for the city is not well run. Here's two sources for problems like in the past month:
I think Austin is better about building too, meanwhile in the Bay Area they just rejected units desperately needed in the tenderloin because they might become a "tech dorm".
Scroll to the bottom to "tax history" to see how this can be. Despite the value of the house going to the moon the previous owner was just sitting on a decade old assessment with no pressure to sell.
Vancouver BC might be in the same range now, where things like this show up for 2M CAD. And the conversion rate won't make up for the differences in salaries
I don't think Palo Alto is a great comparison; it's a mixed new/old-money city where a lot of rich people live (with the ultra-rich next door in Menlo Park and Atherton). Compare Austin to something like Fremont, San Jose, or perhaps San Mateo. Sure, those will still be more expensive than Austin, but that $1.7M number is pretty realistic for a nice house in those other cities.
The area they are building in is the outskirts of Austin where an unimproved 1/3 acre will go for less than $100k. With current building costs, a house that would cost $2 million in California, would cost less that $400k in this area of central Texas.
In addition, a large part of Texas is privately owned and counties are much more relaxed about land use. This means high land availability for new housing. This will reduce the price increases from demand increases.
Half hour outside east Austin is super cheap, no idea what you're talking about. No one is in "for a world of hurt" unless they insist on living close to downtown.
Property taxes are higher than California, right? I can't find the source handy at the moment, but I've heard that a house in Austin that looks like a couple hundred grand cheaper than an equivalent house in California for the listing isn't actually any cheaper when you factor in the increased taxes and potentially other costs I'm not aware of.
Property taxes are _much_ higher in Texas than California, in fact Texas has one of the highest property taxes in the nation (because there's no income tax, and TX still needs to fund itself somehow; TX also has one of the highest sales taxes for this reason, too). You pay the same on property taxes for a $400k house in Texas as a $1M house in California.
Not only that, CA has Prop 13: for better or worse, your property tax is essentially frozen in the year you buy your home in CA. In TX it increases with the market value every year. And the assessors are ruthless – market value of your home went up by 20%, as they have the past few years? Expect your tax bill to too (granted, I believe legislators have restricted this to a maximum increase of 8% a year as of this session, but I believe localities are still allowed to exceed that in some cases).
Source: I'm from Dallas, and a homeowner in Los Angeles. Though rates are publically available:
This is a huge reason that property values are cheaper in Texas. Either you pay high property tax rates on (relatively) cheaper property or you pay exorbitant rent to your landlord that just keeps escalating.
There is very good evidence that property taxes are capitalized into property values. Land taxes in specific are fully capitalized (which is to say, they lower the price of the land, and the landlord can't pass on the tax to tenants), right in line with long-standing theory:
A decade ago, I owned a 200k house in Austin while making a 6-figure salary in California-- I paid more in property taxes on the house in Austin than I did on income taxes on my income in California.
This is really only the case if you had substantial deductions of some sort.
Assuming you made exactly 100k as a nice lowball you'd have owed $6947.92 in 2011 California income taxes. Harder to quickly find 2011 Austin property taxes but using todays rates without the homestead exemption you would have paid $4653 presuming you lived in Austin proper with Austin ISD taxes.
This is obvious a simplified calculation assuming basic W2 income and may very well not have applied to you, but for others reading it's nice to see some actual numbers.
No homestead exemption. Roughly 3.1% tax rate. Northwest corner of Austin, in the 78717 zip code. Leander ISD if I recall correctly.
California taxes were affected by CA deduction, CA personal exemption, and 401k (which I didn't max out, and even without it I think the original claim still stands although just barely)
I agree! Also the fact that TX has much more lax zoning laws (Houston has none whatsoever) than CA, and a general lack of NIMBYism compared to the Bay Area in even the cities, you get a much more affordable metro area.
Unaffordable housing prices are as much a policy choice as a function of the market.
That's a state sales tax of 6.25%. Austin and Dallas are at a minimum of 8.25%, for example. Though if you're in a specialized planning district, you can be looking at sales taxes of 10%+.
Cities have their own sales tax. And so can school districts (and they can have their own property taxes, too).
And sure, you're right, there's not much housing under $1M in the Bay Area. That doesn't change the fact that a $1M home in TX still pays about the same in property taxes as a $2M home in SF. Or the fact that in SF your property taxes are essentially frozen at purchase price, and in TX they will increase every year.
OP was referring to sales taxes in TX in general, not the highest cities, but point taken.
And sure, property taxes for a $1M home in TX is the same as a $2M house in SF, but that's a mansion in TX and a 2 bedroom apartment in SF. You get way more for your money.
And google tells me that TX does cap property tax increases. Not like Prop 13, but we all agree Prop 13 is terrible, right?
And everyone is ignoring the state income tax which is 9.3% in the $60 to $300k bracket (and goes up to 13.3%). So if you’re making $250k, that’s saving of $20k alone, which is about the property tax in TX.
It’s not even a close comparison in terms of the tax burden between the two.
Additionally as someone who did some casual redfinning around Austin at the start of the pandemic, I'd say my own natural inclination was to shop pretty close to the price of the California single family home (i.e. $1M) and envision what it'd be like to live in/grow into the Texas mansion (i.e. $1M) at the equivalent price range. I probably wouldn't have downsized to a $400K home and I probably would have been sticker shocked by the property tax bills.
Another thing that makes the home buying / mortgage comparison not 1-1 is Fannie Mae:
Austin/Dallas/Houston/San Antonio are not classified as "High Cost of Living" areas, as SF/LA/NYC are. This means that a conventional mortgage as of 2021 in Texas is capped at $548k, while in LA/SF it's $822k. The practical effect of that is any mortgage higher than $548k in TX is classified as a "Jumbo"/non-conventional loan, which usually comes with a higher interest rate and/or higher percent down required.
You want a $1M house in TX rather than CA? Be prepared to put $400k+ down or accept a higher rate + PMI, rather than the normal 20% down in CA. All on top of the fact that you're paying the equivalent in taxes to a $2M+ home in CA.
I thought Prop 13 no longer applies to current purchases? If you own a house under prop 13 it’s under way low property tax, but if you sell it, it get reassessed at the new current value. Is this not the case? When we purchased our house years ago the taxes weren’t cheap and we had to pay the additional Melli-Roos tax.
Prop 13 still applies (though I personally think it inflates home prices in CA above their "true" market value and disincentivizes anyone from selling/moving).
When I bought my home this year, it got re-assessed at my purchase price, yes. But for as long as Prop 13 is the law of the land, no matter how much home prices in CA inflate, my property tax is more or less capped at the price I paid for the house.
> though I personally think it inflates home prices in CA above their "true" market value and disincentivizes anyone from selling/moving
Exactly. And this is important for potential homeowners to understand. It is one of the things that makes California real estate so attractive. One has to view their house as an investment, not just a place to live.
If California somehow repealed Prop 13, you would see their property tax rate zoom up to the point where Texas property taxes wouldn't seem that outrageous by comparison.
In November 2020, California scaled back on some of the benefits of Prop 13 for families. Prior to Prop 19, properties could pass from parents to children and the property tax basis would not increase. Now, the benefit is limited to the parents' primary residence, the inheriting child or children need to reside in the property for one year as their primary residence, and the amount excluded from reassessment is limited to $1m.
The main proponents of Prop 19 were realtors who expected the change to result in more sales of properties after parents die. I haven't seen data on it, but they were probably right. There will probably be more sales as children who inherit their parents' properties can't afford to keep them after reassessment.
Prop 19 was titled the "The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act" because it allowed seniors and victims of wildfires to sell a home and buy a new one anywhere in the state and carry over their current property tax assessment, regardless of the sale price. However, it totally undermined one of the best ways for families to pass wealth on to their children, the acquisition of properties for investment. Corporations, of course, were unaffected.
Well, considering most of those heirs who are not using it as their primary home would just end up using those homes to rent out at market rate anyways, it makes sense to tax it. If they don't want to deal with that, they can just sell it. Commercial properties over $3 million were also affected. Those moving into the inherited home as their primary residence a̶r̶e̶ ̶n̶o̶t̶ ̶a̶f̶f̶e̶c̶t̶e̶d̶ EDIT (see comment below): *will be re-assessed, but includes a generous exclusion of the first $1 million.
I'm a would-be beneficiary of Prop 13 Pre-19 and a homeowner in Los Angeles, and even I voted for this reform. I would vote to repeal Prop 13 in whole if I could. Prop 13 was originally meant to protect middle-class Californians from losing their primary home (for which other alternatives exist: see TX. Your primary home cannot be taken from you for tax reasons or in bankruptcy) – not a tax loophole for generational wealth.
> Those moving into the inherited home as their primary residence are not affected.
Not true. Only $1m of assessed value is excluded for heirs moving into an inherited property as a primary residence. Inheriting property worth more than $1m is not a bad problem to have, but in places like Los Angeles it means that a lot of people not be able to afford to live in the property and will be faced with either fixing it up for use as a rental or selling the home they grew up in.
It doesn't really change my point though – I still don't see why a $2M+ property deserves to get transferred tax free. A $2M property would still only pay a little over $10,000/year in property taxes after the $1M exemption (which you can deduct against federal taxes, even with the SALT cap, which itself will likely repealed!). A pretty nice discount for an heir compared to someone who just went through actually buying a $2M home and pays twice the tax.
Honestly, if you're inheriting up to a $5M home for free in CA, and are still reliant on a job to make ends meet, the payment probably comes out to more or less what you would pay in a mortgage+taxes for a ~$1M home. A pretty good deal! If you're inheriting anything more than a $5M home, then I don't really think Prop 13 was intended for you in the first place – people with $10, $50, $100 million+ properties, well, it's my belief that we shouldn't be basing our entire housing policy on what's best for them. They can likely afford the taxes.
Not to mention that you can only shield a house from re-assessment for 1 generation, so even if there was a multi-million dollar family home that this family simply couldn't afford to pay taxes on otherwise, the heir of the heir would have to pay taxes regardless. So what's so privileged about the situation that tax reassessment gets to skip a generation?
The law as is is designed to benefit a shrinking sliver of the CA population while debatably actively hurting the rest.
I think a decent compromise that won't actively pull the rug out from anyone while also leveling the playing field is just ending Prop 13-related inheritance exemptions altogether. It wasn't even part of the original law. Then get rid of the exemption for all commercial and secondary/investment properties going forward. Let people live in their primary homes with a frozen tax basis, sure, just don't let them transfer it (and for the edge case, to encourage downsizing after becoming "empty nesters", allow people to transfer their assessed tax basis to a property of lesser or equal market value).
> the SALT cap, which itself will likely repealed!
What's your basis for this belief? My understanding around Biden's tax plans was that the SALT deduction cap would likely remain at $10k.
Just did a quick search for recent news, and nearly all of what I'm reading is doom-and-gloom around the possibility that the SALT deduction cap will be repealed. Which makes sense, since that would lower tax revenue, and that's not something politically palatable with the Dems trying to push through multi-trillion dollar infrastructure spending.
Well, it appears you may be right, there. As of last month, I read the consensus was Democrats wanted SALT repealed. It looks like that won’t be the case now, as the spending plan gets whittled down — now it’s looking more like a raised limit, at most.
Prop 19's targeting inheritance exemptions will have uneven effects. The very wealthy won't be affected at all because, on the advice of their estate planners, they will have transferred their properties into corporate entities long ago. (Recall that properties owned by corporations aren't reassessed when stock ownership changes and Prop 19 didn't change that.) Heirs to properties worth less than $1m who intend to use the property as a primary residence are also unaffected.
There is, however, a large group of ordinary middle-class people, particularly in cities like Los Angeles or San Francisco, who own what were once modest homes that are now worth more than $1m.[0] Their heirs will be burdened when the property tax bills double (or more) in one year, even if the heirs use the property as their primary residence. More heirs will sell inherited properties, which is exactly what the real estate brokers who promoted Prop 19 intended. $1m+ is also a sweet spot for broker profitability.
The intent of Prop 13 was to stabilize property taxes after the double-digit hyperinflation of the 1970s by capping annual increases in assessed value at 2%. That created stability for individuals and businesses that led to massive investment in and migration to California.
Prop 19 undoes that stability, but only for a narrow group of people: heirs to $1m+ properties from parents who did not have sophisticated estate planners. From Wikipedia:
The Case–Shiller housing index shows prices in Los Angeles, San Diego, and San Francisco appreciated 170% from 1987 (the start of available data) to 2012 while the 2% cap only allowed a 67% increase in taxes on homes that were not sold during this 26-year period.
[1][2]. On average, heirs to $1m+ homes in those markets will be hit with roughly a 103% increase in one year (170%-67%). So, Prop 19 hits a narrow group of people with a 100%+ tax increase when Prop 13 was supposed to limit increases to 2%. A compromise rule could have been to spread out the increase over the course of a few years, but that wouldn't induce more sales like the brokers' lobbying group wanted.
Personally, I think it would be fair to increase the annual cap from 2% to 4%. In a decade or so, that would undo much of the tax discrepancies caused by Prop 13. And the effects would be spread out, so people could plan for it. Increasing the cap, however, would never pass because it is clearly a tax increase on everyone and doesn't benefit a special interest like real estate brokers.
homesteads are capped at 10% increase in valuation.
City budgets are capped at 3.5% without a vote.
The largest share of property taxes is actually school districts which run roughly 50% of the property tax in austin. The city is 25% and the other 25% is the county, health district, and community college.
Tax rates float. If the valuations double, but the taxing entity budgets stay the same, then the tax rate will drop in half.
Rising valuations dont have much to do with the increase in taxes over time.
Property tax is higher but there is no state income tax. Also, property tax increase rates are significantly higher as compared to California. Austin is also growing very fast and is quickly turning into the sprawl that I have always associated more with Dallas and Houston.
Financially speaking, either place may turn out advantageous depending on your house's price and income. CA (Bay Area) has a lot of other positives that are almost impossible to get in TX - tech scene (quality and quantity), nearby sea, desert AND mountains, good weather are just some of them.
Many years ago, I chose to move to TX as opposed to CA. But most recently, after living abroad for some years, I picked Bay Area to move back to mainly because most of my friends have converged to Bay Area over the years - almost all are in tech. However, if you aren't involved in tech and don't care about some of the other positives of the Bay Area, Austin is almost a no-brainer.
The interesting thing is, the sprawl of Dallas and Houston have now started to work in their favor.
I live in Dallas. We're growing massively, but honestly, I haven't really noticed too many changes in my day to day. It takes just as long to get somewhere as it did 5 years ago.
Because they were large, spread out cities already, the highway infrastructure, suburban development, and local planning have all been optimized to support that reality. Austin tried to keep that smaller college-town feel, which was hip and trendy and cool for visitors like SXSW, but is now leading to the awful growing pains they face today.
I think Austin has the potential to be a really great city, but it's gonna take decades to get anywhere near that reality.
In the meantime, Houston is building another loop, Dallas is extending the DNT practically to Oklahoma, and Ft Worth has a shiny new tollroad on the west side of the city. They'll keep absorbing growth while Austin struggles to get organized. Unfortunately, many of the people flocking to Texas don't know any better so they go to Austin first.
Everything you said aligns perfectly with what I have heard from friends who still live in Austin/Houston. I personally would still rather live in Austin though as opposed to Houston or Dallas.
> Property tax is higher but there is no state income tax.
I do wonder how much this affects salaries, though. Do employers in states with lower or no income taxes tend to pay worse for the same job than employers in states with higher income taxes?
Sorta. From my anecdotal evidence up the road in Dallas, software engineers still make comfortable salaries, but more in the $120k~ range. Nobody I know up here makes $200k+.
One thing to consider though, is that the companies available to work for outside Austin, probably aren't supplementing salaries with generous stock compensation packages. If more startups move to Texas, that could change too.
With two working adults in the house, 120k/ea is a very comfortable living.
No. Supply and demand curves for the specific labor in question determines salaries. WA state has a very low W-2 income tax, in the 1% or less range, and has very high incomes due to the type of labor being sold there.
A lower income tax may cause more people to live somewhere and/or more people to be willing to work for less, but it still comes down to whether or not the supply of labor willing to work at a lower price exists.
Arguably taxes are higher for newcomers. Yes rates are lower but purchase price is insane. But Native Sons of the Golden West pay pennies on the dollar in property tax. Old businesses to. It's a $30B per year tax cut to successful real estate investors. That's 3x the size of the NSF and several billion more than NASA.
This is the root of all California's problems. Underfunded schools, endless sprawl, state parks closing, crumbling infrastructure and rampant housing speculation. It's all because of Prop 13.
What state parks are closing? What infrastructure is crumbling? The new construction on the 5 freeway is some of the most impressive work in the country and LA is currently building more rail than anywhere else in the country at once currently; la metro has been making money hand over fist since 2016 sales tax initiatives. CA also spends some of the most money per pupil in the country. Unlike other parts of the country, the sprawl has been pinned now by geography at least in LA where its infilled to the mountains, and can infill no further owing to the terrain. Construction goes vertical now in LA, there's almost no greenfield left to develop short of some holdout farm plots in San Bernardino and Riverside counties. In texas, eventually there will be unified suburban sprawl all between houston and austin and dallas-fw, probably within our lifetimes, since there is no geography to pin development.
The question is whether the equivalent house is just a couple hundred grand cheaper, or a million cheaper? Couple million maybe for a nice new mansion?
Median home price in austin is nearly 600k and in California its 800k, so its not as dramatic as a million cheaper unless you are considering places like the hollywood hills where homes go for north of $1.4m minimum (although you can get a home elsewhere in the LA area for $750k in many parts, this is a relatively high water mark)
>Median home price in austin is nearly 600k and in California its 800k,
Compare Austin to somewhere near Freemont or compare TX to CA. Comparing Austin to all of CA is more than a little dishonest since there's a lot of rural nowheres in CA to drag down the average price but the comparison exludes all of Texas's rural nowheres.
Absolutely. I am a Californian, and when I see my family talking about the houses they bought in Texas, and yes maybe that was a decade back, and I compare them to an equivalent house in Cupertino (there are none maybe, and I am not that familiar with Fremont but I think it is the same range, just 10% lower worst case), the price difference has to be a million at least, could be more.
Median home in LA county is 775k, lower than state median even. Concord CA, 35 minute drive from freemont, has a median of like 650k. Note I said median and not average too.
Austin typically has a far lower murder rate than SF (usually 1/2 to 1/3 the rate of SF looking over the prior decade). Austin is usually well below the US national murder rate, which is rare for a major US city. Austin has a dramatically lower robbery rate vs SF. They're similar on assaults. Austin is higher by 50% on rapes. SF is a lot higher on thefts. They're similar on burglaries.
It’s not just about housing price, it’s also about location. In the bay there are almost no buildings so you don’t have much choice and often have to commute from very far away.
The average annual housing cost in Fremont is $2470/m. In Austin, it’s $1619. That’s like giving every employee a $10k/year raise (well, better as it’s after tax).
As someone who lives somewhere with an actual housing crisis, I just did a Zillow search for homes in Austin and I don't think you quite understand what a housing crisis looks like. Your homes look dirt cheap by Kiwi standards.
They look cheap because they're underpriced. At the moment, most houses are closing 15-20% higher than list and a lot of them are offered in all cash deals.
That's slowly changing, but I suspect that's temporary.
Mountain View is just an example, and not an extreme one like Atherton or Palo Alto. Even if you go as far as say Pleasanton the market is still in another league compared to Austin.
Not that different from the commute that Apple employees I knew were making. They spent 30 minutes commuting to where they would pick up the shuttle, three or so hours on the shuttle, get off the shuttle and have lunch at Caffe Macs, maybe take a meeting, then get back on the shuttle for their ride home.
The shuttles had Wi-Fi, so they could get all their regular work done while on the shuttle. That was functionally their office, even though they had a desk in the building on Bubb Road.
And they were getting paid well over $150k, and living in group homes east of San Jose, because that’s all they could afford to live in.
Baffling to me hearing about Americans in SV who can't afford to live on their own on over $150k, that would easily be a top 1% salary in the european city I live in
When I was working on a hardware project at Lyft I interviewed at least two Tesla engineers who said their sole reason for wanting to change jobs was that occasional commute.
I temporarily lived out in Sacramento, and commuted occasionally to MP. This is not bad compared to some others, but seeing stationary brake lights getting on the highway at 4am was something else
I’m pretty sure if I moved out to Sacramento from where I am now (the South Bay) I’d try and take the Capitol Corridor in, if I could find any way to make the timing work. It’s not that I’d expect it to cut down on my commuting time, but I’d definitely want to test whether it could cut down on my commuting stress.
(Granted, these are pre-pandemic thoughts about moving.)
For two years before the pandemic, I carpooled with Tesla HQ employees almost one a week (depending on who I got matched with on a particular day) and I only live 15 miles away.
Housing was costly in Palo Alto well before Tesla decided to make it their headquarters. Elon just hates CA for forcing their factory to close during the pandemic, biting the hand that feeds him.
In what way the state is the hand that feeds you? Arguably California bit one of the hands that fed it, as evidence by the ability to move, since it is not that special of a place to do business. The state’s existence is afforded by the residents not the other way around.
I've looked at properties in Austin area a few months back. It's more affordable than CA, but it's still way out of reach of most non-HQ staff that Tesla employs. I've read the stat that property values have gone up 43% due to exodus from locked down blue states over the course of just the past year. Couple this with Texas' higher than average property tax rate (_especially_ in Austin area) and you've got some pretty un-affordable housing. FWIW, I'm looking at FL now instead.
As someone who used to live in Tampa Bay—and may have to move back for family reasons next year—I find that a little dubious as well. :) Although to be fair, Tampa and St. Petersburg both got measurably more interesting in the last decade than they were when I left in 2002.
Never lived in Jacksonville, but I’ve visited it and have a friend who used to live there. Jacksonville is to Florida what Fresno is to California: bigger than you think, probably perfectly pleasant, utterly non-descript. :)
St Petersburg is nice. Amazing beaches and kitesurfing at fort desoto, plenty of water access for boating and sailing, generally out of the path of hurricanes. Not much in the way of universities to recruit from though.
Don't know yet. One thing I realized is I can't really decide whether a place is worth moving to without living there for a few months. So that's what I intend to do before I uproot my family and move. I like TX in general, but a week or two does not give an even remotely complete picture, beyond just the basic "affordability" and quality of available housing stock.
The traffic situation is already pretty bad in that area, seemingly deliberately so. That is the case even during the pandemic, I can only imagine how bad it is when _nobody_ is remote. It seems that progressive Austin wants everyone to move to the city and give up their cars, which is not a realistic thing to do for most people in TX because it's not built for such lifestyle. I have no other plausible explanation.
Since I'm apparently "posting too fast", I'll just post my reply to the post below here.
US cities (including Austin) are not built to make this viable. I grew up in Russia which mirrors the European way of building things. Everything you need for your family is within walking distance, for what I hope are obvious reasons. The US is not built for this. If one's goal is to get rid of cars, you have to build cities with that in mind. This takes decades, which is why nobody seems interested in actually doing this. Instead we get this passive-aggressive "let's build less parking and roads" thing that you see in US urban centers. No attention whatsoever is paid to how the folks actually live, how they raise their kids, and so on. I'd also argue that, as we switch to electric (and eventually to nuclear power, since that seems inevitable if we actually want to solve the climate crisis rather than just make Al Gore filthy rich), cars will become less and less of a problem, and population will spread out rather than move into the cities. Cities are a bad deal as it is. Expensive real estate, congested roads, high crime.
Take a ton of people with CA urban ideology and plop them down in a random city in TX and "intentionally bad traffic because we expect everyone in the city to give up their cars" seems like a not unforseeable outcome.
Frankly this is why we leave major infrastructure planning up to the states so that the state can wring the best possible outcome out of an entire economic region without getting too bogged down by local politics. Left to their own devices cities would build shit infrastructure because they'd try to exclude the poors and other petty stuff like that.
In this case terrible traffic is the result of buding a ton of crooked relatively narrow roads without any rhyme or reason. Family with children _cannot exist_ in most of the US without a car. Even in Austin itself if you don't have a car everything is just too far apart, and you could spend an hour or more fetching groceries quite easily. I actually forgot my driver's license at home and while it was being fedexed to me I got to experience the car-less Austin lifestyle. Let me tell you authoritatively, you wouldn't want to live like that. But at the same time if you live in Austin itself you don't want to bother with a car either, there's relatively little parking, so you'll really be struggling to find a spot once COVID subsides. I've seen the same deliberate shrinkage of parking happen in other "progressive" cities. Nobody gives a shit if you got kids and need a car. Another thing that Austin shares with other progressive cities is its massive and growing homeless population, though I must also say that even the homeless people are nicer there than, say, in SF or Seattle. At least I haven't seen anyone shoot up heroin in public or shit on the sidewalk.
SF seems to be telling me to give up my car, but that's a non-starter unless Muni gets about 500% better (higher frequency, more coverage, faster routes).
Even in Manhattan, where transit is pretty decent, the only reason why transit is faster (sometimes) is because traffic is terrible all the time.
You still have to find a builder, or a place where a builder has built a house that you can afford to buy.
Even regular handymen are backlogged by six months or so. Forget trying to get a builder within a year or more.
Meanwhile, all those expensive high rises on the river for those millionaires and billionaires keep going up, faster than you can blink an eye.
> property values have gone up 43% due to exodus from locked down blue states
Citation needed for this property value claim, also for the existence of “locked down” blue states. I haven’t seen a lockdown yet like many other places.
Not anymore. Go to Redfin and see for yourself. I wasn't even looking in the "city proper", I was looking within half an hour drive to Austin downtown. I consider it dumb to buy property without any land to go with it, so I wanted a decent house with an acre or two of land at least. The only decent options I was able to find were all over a million dollars. And then there's flood insurance to contend with in Austin area - you really have to look where it does and does not flood or you could also be on the hook for $1K/mo in flood insurance, without which the bank won't issue a loan.
yeah, 50 million over 10 years is nothing. That’s 5 million a year. They made 101 million profit in a day by selling 1.5 billion worth of their bitcoin holdings
> That amount could pay for lots of schools to built etc
I think if you research school costs in the jurisdiction in question, you’ll find $54 million could not pay for a lot of schools to be built. Maybe 1-2.
I really doubt it. The bay area has the most absurd housing prices I've ever seen. Looking on zillow, I've seen places that aren't as good as mine in Chicago go for 2-4x the price I paid. It is absurd and Illinois isn't known for being a low tax state recently.
Should have just said 4x cause the 2x condos I saw where acceptable to me but way worse. This website [0] lists about a 4x price difference on average price per square foot.
That is a ridiculous cost of living difference for the most expensive purchase one will likely make in their life.
Housing cost imbalances are temporary. California migrants to the Portland and Seattle areas are already learning this. So, the real estate arbitrage of taking Bay Area profits and dumping them into Austin houses will be brief, painful, and the market will respond accordingly.
As the official spokesperson for the company, if Musk says it's "housing", then housing is the official reason.
It may not be the real reason (which probably has more to do with his feelings about California in general and maybe proximity to SpaceX's Texas facilities), but it's the official reason.
That's temporary and the company has to look at things long term. Austin doesn't have the geographical barriers that the Bay Area has. If the building supplies and labor are available, Austin can sprawl out in pretty much any direction, though obviously transportation eventually becomes an issue.
Compared to the Peninsula, Austin is basically free. Median home price in Austin is $575,000. Median home price in Palo Alto, where the current Tesla HQ is, is $3,488,610.
When CEOs move, they often move their headquarters closer to where they live. Somehow Tesla managed to survive all the problems of California until shortly after Musk moved to Texas. Folks talking about the advantages and disadvantages of California vs Texas may be overthinking this.
I mean, you could just as easily argue that the problems of California are what caused his move to Texas, as simply testing the waters for the move of the HQ.
The main problem for musk in this case being his tax burden, since he is otherwise entirely insulated from every other issue affecting most californians.
His tax situation really has nothing to do with it. If he sells his Tesla shares, he's still going to owe CA tax. But he never has to sell any Tesla shares, he can just buy hedges against them and take out loans. If you have sufficient capital assets, you never have to actual earn any "income" or generate any "capital gains" if you don't want to.
> But he never has to sell any Tesla shares, he can just buy hedges against them and take out loans
So he takes out a $1 billion loan, and he offers $1 billion in stock as a security, and then also buys a futures contract (or a put option) on his $1 billion of stock to lock in the current price, so if the stock goes down in value over the life of the loan, the lender doesn't lose their security? And then when the loan falls due, he refinances – get a new loan using the same mechanism, and use it to repay the existing one? And he doesn't owe capital gains tax on the stock he uses as security, because he doesn't actually sell it?
I suppose though, you can't just go on refinancing forever. One day he will die, and then it will have to come out of his estate, and I guess his estate may pay the capital gains tax then? So it is really delaying paying tax, rather than getting out of it forever?
Unless, I suppose, he leaves the stock to a trust in his will, and transfers the loan to the trust too, and then the trust can continue this process long after he is gone? And maybe, if it is a charitable trust, even use some charitable tax exemption to get out of paying the tax permanently?
Yep, you've got it. The most beautiful part of the whole thing is the step up in basis for the estate. When you pass on your estate, the cost basis of all your assets get "stepped up" to the current market value. This means that if he passes on his estate to his children, they can then sell the shares to repay the loan with zero tax.
All this adds up to zero capital gains taxes being paid ever on the entire amount.
I'm not sure I understand the question. The assets in your estate get their cost basis reset to the current market value when your estate is passed on. That means the capital gains in his shares disappear.
That being said, the estate tax would kick in for everything over 11m, so he'd have to use other tricks to work around that limitation.
There will be interest on the loan. Probably fairly low given the collateral, but it won't be 0 (assuming this is not a sweetner from some investment bank that works a lot with Tesla/SpaceX).
If it's hedged you actually don't have any upside so you will always be 'underwater' on the loan assuming >0 interest rate.
If interest rates were higher, it probably wouldn't make sense to do this endless loan trick[1]. Say you get charged 5% on this loan or you could pay 30% cap gains. It would only take 5 years for the interest payments to outstrip the upfront hit on the tax.
1. This is very simplistic though, as likely the $1bn would be invested in some way that would kick off some return, probably enough to cover the interest.
> I suppose though, you can't just go on refinancing forever. One day he will die, and then it will have to come out of his estate, and I guess his estate may pay the capital gains tax then?
This is the best part. The cost basis for assets is stepped up on death to the price of the asset on the day that the decedent .. became the decedent. That becomes the cost basis for any capital gains tax the heir would owe if they sold the asset.
Also he could just pay whatever “high” taxes there are and I’m confident he would still have enough money to buy whatever he needs plus plenty of fun toys. He’ll be alright, I’m confident of it!
My point is just that moving because of high taxes doesn't make sense for him, even if you think he cares about the money. He doesn't have to pay it unless he wants to.
>I mean, you could just as easily argue that the problems of California are what caused his move to Texas
Who knows. But the biggest fundamental problem for California here honestly is geography: Boca Chica is the best single land based potential BEO spaceport in the continental US, simple as that. That's why SpaceX is there. As close to the equator as they can get, with a lot of water in front of most of the launch paths they want, and no urban buildup there. For the small percentage of polar orbits they'll want to do there will remain Vandenberg, or eventually converted oil rigs for sea launch, but the vast majority of SpaceX's cadence for the foreseeable future will be Starship going to more standard orbits where the bulk of Starlink will exist or eventually beyond Earth's orbit for trips to Mars.
Sure taxes and all the typical rigamarole that typically comes up in these discussions might have weighed a little one way or another, and in the vast majority of CEO/HQ moves weigh quite a bit. But to the extent that SpaceX is the biggest guiding unified dream of Elon Musk, and given the constraints of logistics, economics and the physics of orbital launch, it basically had to be there. Which means he has to be there. Which means it's a lot easier even for someone with a private jet if the HQ of his other big enterprise is around 300mi away nearly due north in the same TZ vs ~1650mi west.
If for some reason the jobs situation and housing was just perfectly impossible in Texas maybe he would have sucked it up but even then I doubt it given his (and Tesla's) resources. At the end of the day like everyone else he can't buy more than 24 hours in a day. He can buy more efficient use of them.
No it isn't. CA will still try to tax those shares if and when he decides to liquidate them. However, Musk does not ever need to liquidate any shares. If he never wants to pay any tax, all he has to do is buy a hedge against the shares (thereby locking in a particular price) and take out loans against the now hedged asset. And like magic, he's got all the cash he could ever need and zero capital gains.
His estate pays them back when he dies. Inherited shares have their cost basis reset to the current value, so if his heirs sell them immediately there's no capital gains to be taxed.
The loan will be cheap but not free. The problem with shares is that their price can go down to zero in case of company bankruptcy. So there will be premium for that risk.
Not really. His loan will be way way way way over-collateralized, and like I said, he can even hedge it perfectly. His cost will likely be about the RFR.
The talk about wealth taxes was probably one of the reasons he decided to move. You want to get all the billionaires to move out of your state, just bring up wealth taxes.
Elon personally potentially saving billions in taxes might have a lot to do with both of those ie his move and then the company's move. As an investor in the company, I am concerned about that (that this change was done to benefit one person rather than the company).
I'm a shareholder as well. I can see the value add of a friendlier tax regime for the company, its employees, and indeed its CEO, less bureaucracy, and access to clean energy that Texas has to offer over the Bay are. I see it in terms of share holder value. Overpaying for staff, infrastructure, housing, facilities, etc. and dealing with local government that is too inept to address even the most basic challenges (housing, water management, roads, electricity, etc.) is not share holder value.
They have big expansion plans and most of that is outside of California. So, I'd say this is a good move for them. They no longer need the Bay Area investors. That was always the main reason for being there. It was critical to them just a few years ago when they were struggling to survive. But they turned a corner and are now very profitable so they can cut loose from that safely.
Tesla is now a multinational and while California is still an important market for it, they have bigger markets that they are thinking about now where they are starting to operate huge factories as well. Fremont went from being the largest Tesla factory to being one of the older and smaller ones in a few years.
This is why we have markets. This news is now public, and TSLA is down today, ie investors have decided it is worth less after the news than before it.
Slightly up now. Tesla has been trending up throughout last quarter by about 150$, 50$ in the last month, and 10$ in the last week. It's now worth more than before the announcements. Not surprising considering another great quarter and the opening party for their Berlin factory last weekend. Of course most big investors would have factored in most of that news already long before any announcements would have been made.
Whenever I read news like this I can never figure out what moving a company's headquarters actually means. Musk has already been living in Texas for a while. Tesla already has sizable operations there (both offices and factories). The company is registered in Delaware, so legally this change means nothing. They aren't going to fire employees in California or force them to move (in fact Musk said that they will continue to expand their Bay Area staff). They will continue to pay (or not pay) taxes exactly the same as before. So, besides a press release what is the change exactly?
It's also funny that Tesla still can't sell their cars directly to customers in Texas.
uhhh... they are accountable to every one of their clients, every time those clients make a purchase.
For almost all billionaires, that's a far larger constituency and a much more frequent and efficient selection process compared to elections every x years by the 30% of the population who bother to vote. As soon as they stop performing, the money stops rolling in.
They aren't even held accountable when they sell products that spark a nationwide overdose epidemic.
"That may seem like a lot of money, but billionaire math can be deceptive. The Sacklers proposed to pay the $4.5 billion out over nine years. Their current fortune is estimated to be at least $11 billion. Conservatively, with interest and investments, this means they can expect a 5 percent annualized rate of return on that fortune. If that’s the case, they’ll be able to pay the fine without even touching their principal. When they’re done paying in 2030, they will probably be richer than they are today."[1]
There are a few cases of powerful politicians serving jail time. I can't think of a single case where a billionaire was put in jail, except for Madoff, because he was stealing from other billionaires. When you've got billions, you have enough to buy politicians every cycle. You are effectively above the law, forever, regardless of how well your initial product line is doing.
The US has around 700 billionaires. That is comparable in size to the US House of Representatives. There are a lot more politicians than billionaires. Plus there is a lot more turnover in politicians than billionaires.
It doesn't tell you anything that only 1 of them went to jail. Even assuming they are incarcerated at something close to the background rate (an unreasonable assumption) we would expect 0% of them to be in jail; at any given moment. Adjust that for the fact that they have basically no rational reason whatsoever to commit crimes and there is nothing unusual going on.
2) "Wealthy person goes to jail" isn't actually all that newsworthy. Politicians are always going to get more news headlines because, ironically, or politics.
> Adjust that for the fact that they have basically no rational reason whatsoever to commit crimes
They may have no rational reason to fear prosecution, but they commit crimes all the time. Becoming untouchably wealthy does not remove base desires from anyone, it only shields them from accountability.
"The uber-rich also shield their wealth through elaborate purchases of real estate, yachts, jets and life insurance. Moving money around between bank accounts, estate and inheritance planning, engaging in a web of complex financial engineering, help them from paying their fair share of taxes. Some of the documents suggest the possibility of financial crimes, including money laundering."[1]
If you don't file your taxes correctly and you fail to pay the fines, or you attempt to defraud the government, there's a very good chance you will do time. The same is not true of the billionaire class no matter how much money the steal through tax avoidance schemes.
Once they have enough money, they can lawyer up and get out of just about anything, even the repeated sexual assault of their own family.[2] The only time they are held to account, with a few exceptions, is when the victims are other billionaires or powerful autocratic states.
This is not some new anti-wealth idea. Equal application of the law regardless of wealth, birth, or status is the fundamental American value. Or at least it was.
They are billionaires. They can probably just buy what they want, even for some of the more out-there base desires. Why risk jail time?
You seem to be going to tax minimisation - sure, the billionaires have a massive advantage when they engage with the law relative to you or I - but there is no reason they should go to jail for that. The basic assumption is if you have multiple accountants doing your tax return then the tax return should be legally proper. It got a lot of attention.
I'm not talking about Zuck trying to buy a personality in the form of a custom yacht. I'm talking about Epstein and people like that who prefer to rent people against their will, or the Sacklers who will gladly set ethics and death tolls aside if there is enough profit opportunity.
Billionaires should to go jail for tax fraud, preferably in proportion to the amount of money they stole. They are not running their itemized deductions by a typical accounting firm. They are seeking out teams of lawyers and accountants with a reputation for hiding money, and paying millions of dollars because they expect them to be good at it.
Most of your points I'm ignoring, but just pointing out the part that seems most obvious to me...
If a large team of expert lawyers and accountants comes up with a plan of action, the odds of it being illegal are tiny. It isn't a fair process, unbiased or transparent. But it doesn't make much sense to expect that billionaires would be jailed for tax fraud. They've got more money than they can spend, why risk going to jail at all. They might do that, but it isn't a rational thing to do.
Sure it can happen, but there needs to be actual evidence before anyone should assume it is widespread.
> uhhh... they are accountable to every one of their clients, every time those clients make a purchase.
Nearly nobody gives a damn about the behaviour, eccentric, insane, evil, or otherwise, of the primary shareholders of a corporation that is involved, directly or indirectly, in producing products that they consume.
I may think that the Sackler family are murderous scumbags, but if I need medication made by Purdue, that's the medication I'll be buying.
> Nearly nobody gives a damn about the behaviour, eccentric, insane, evil, or otherwise, of the primary shareholders of a corporation that is involved, directly or indirectly, in producing products that they consume.
No, but they have to produce a product that someone is willing to consume at a price they are willing to pay for it. Meanwhile, politicians fail to reduce homelessness with a budget of hundreds of thousands of dollars per homeless person.
Business has to do something right or it’ll evaporate. Politicians also have to do something right or they won’t get elected.
But business has to do more specific nice things for more people, more frequently, or they’ll be gone long before an election cycle. Politicians have a few selection events every few years.
The evolutionary pressure on business is far greater, so they reflect what we truly want much better - good or bad.
Look at some lists of top companies from 20, 30, 50 years ago. Juggernauts in their time, most of them have long been out-evolved.
Same with rich families, inherited money rarely lasts more than a few generations and tends to decline precipitously with each new batch of heirs.
But we have politicians routinely kicking around for decades based on nothing but platitudes and general charm.
Politicians are only accountable to the people who put money into their election.
Which means, mostly the millionaires and billionaires. And SuperPACs owned by corporations who have unlimited funds that they can give, because Citizens United showed that $1 = 1 vote.
Exactly! The only people who should be able to spout off on things are the powerless. Cant have politicians being called out by people who hold actual sway.
Compared to billionaires (who tend to retain their power and money, regardless of where public opinion stands on them), that's a not a wrong set of adjectives to describe most of them.
To be fair California politicians have no say over voters power of direct democracy. It's why we have prop 13 and thus why our housing market is a nightmare.
Whenever I read news like this I can never figure out what moving a company's headquarters actually means
It depends on the company.
In the case of Tesla, at first it will probably be a lot like Boeing, which hardly anyone in the general public realizes is headquartered in Chicago and not Seattle.
Symbolic move with some logistic practicality with Boca Chica and his 400 sq ft tiny house [1] being home base at Starbase. All signs point to Tesla continuing manufacturing at Fremont and they just opened a Megapack manufacturing facility in Lathrop, CA (hiring 1k-2k workers) [2]. The irony that "pro business, less regulation" Texas doesn't allow direct to consumer sales of Teslas.
Of course he can buy as many properties as he wants, and I'm sure his family is more than well taken care of. The point is he is willing to live in a tiny house so that he can be close to his life project, and not just occasionally, he spends a lot of time at Boca Chica.
What I'm really curious about is what happens to Austin (and to a lesser extent, Atlanta, Raleigh, Denver, SLC etc). Does Austin become the next Bay Area/next Seattle? Crazy high housing prices, and high homelessness/crime? If so, how long does that take, and what happens to native Austinites? If not, what prevents history from repeating itself?
If they don't build housing, they will rapidly have all these problems. There's no magic here, no curse on the Bay Area and Seattle, it's all economics, though the geography of SF and Seattle don't help. From cursory Googling, it looks like Austin is beginning to upzone areas so that apartments can be built, which is a step in the right direction. From what I understand, Austin has already been struggling with affordable housing, so I don't think the outlook is very good.
Austin continues to become less and less affordable for people who aren't bringing in existing home equity from other high cost of living areas. My understanding is the bulk of offers for homes in the Austin area are from Texans and existing Austinites but the bulk of winning offers are from out of state.
This is incorrect, the property tax system in Texas should allow market forces to guide housing development. I grew up in Austin, the city is literally 3x the size when i was in high school, but unlike they Bay Area, they are building a ton of housing, and have since the 90s, because it's not profitable to just squat on undeveloped valuable property because of the high property taxes.
You look at the skyline from when Dell was founded, and look at the skyline today. It's been non-stop residential housing development, and it's only accelerating. The current squeeze is sizable, yes, but the market forces are working.
This is a major difference. In Bay Area, your prop taxes are based on time of purchase. That is game changing. Much better even to rent it then to sell it, if you are paying taxes on a cost from 20 years ago you are golden. Development is hard in the bay area too.
Austin already has plenty of homeless people, and the #s are quite comparable to san jose for example - they are just more visible in the bay area due to lax rules for them (plus weather).
> homeless people [...] are just more visible in the bay area due to lax rules for them
I'm not normally someone who picks on phrasing, but this one is a little orwellian. The implication is that, while homelessness is endemic basically everywhere, the proper "rules" for them to obey are that they are not to be seen. And enforcement regimes that allow them to exist in public are "lax"?
I feel like orwellian is the wrong term. Isn't that geared more towards the thought police and how you feel about the government's politics? Not if you're homeless or not?
I don't think OP meant anything by his post. California's policies are lax. Regardless if you think they're deserving of consideration or not, it's miserable to have a huge homeless population living next to your house. People may pretend its not real but homeless areas tend towards drugs and unsanitary conditions and it's not a great place to raise a family.
The homeless are also people who live somewhere, just not in houses. "Lax" implies that treating them harshly would be better. But fining and jailing them isn't going to make them more able to get a place to live. Aggressive anti-homeless policies just hide the suffering from the well off.
> And enforcement regimes that allow them to exist in public are "lax"?
This would be shocking if the Bay Area didn't have an abundance of shelter for them and very-well-funded homeless service programs, but it does. The resources are all there, but many don't want to use them, they just want to be outside and be left alone, and the cities don't do anything about it.
This being Texas, I suppose Austin has fewer restrictions on new development, so housing prices may be less crazy. To say nothing of taxes, which leave more of your wages to pay the rent.
Your intuition is shared by many, but it is a little off.
Lots of low/middle income Californians actually have a higher total tax burden in Texas.[1] And I’d guess that Austin is one of the places where cost of living is highest for Texas, reducing the net quality of life profit.
Also, residential expansion in those two places is a bit of apples and oranges. Bay Area is surrounded by water, mountains, and Open Space Preserve. Austin is surrounded by land, land, and more land; and most of it is flat.
Austin is where the Hill Country begins. A large swath of it is hardly flat. With that said your main premise is correct. Land as far as the eye can see.
This is a good point. But it does not apply to most well-paid engineers who might consider moving to Austin.
Land and more land is one solution. Density and more density is another, so the downtown can actually grow bigger and bigger; if people are willing to live closer to everything, they have a better chance than in SF (but still a far cry from NYC or Chicago).
Austin has crazy property taxes in comparison to CA, which is where they get you.
2.5% tax rate evaluated for the property prices annually, so retiring on a fixed income in Austin is a tiny bit harder than in CA (that's the real goal of Prop 13).
Income taxes are easier to think about, because it goes to zero when your income drops, but property taxes based on the unrealized value of the house is completely out of your control.
The homestead exemption does apply, but Prop 13 is by far the superior option for an owner, though what Austin does is better for the government's fiscal policy.
That's not the "real goal" of Prop 13. California low income seniors have the California Tax Postponment Program which allows them to defer taxes until death if they wish.
Prop 13 was a "tax revolt" passed because greedy angry landowners wanted revenge on the state for taxing them.
Agree with you, but I would guess most of the Gigafactory workers who haven’t exercised stock options probably can’t afford to own in the Bay Area.
While Prop 13 probably filters down to renters in reduced rent, the supply/demand issues for housing is still pretty out of whack even with all of the new units in Milpitas. Also Prop 13 has second order effects that keep older empty nester boomers in a large house even though they would otherwise downsize if they didn’t lose such a generous benefit.
> Prop 13 probably filters down to renters in reduced rent
It doesn't.
Rent is set by the market. New and old landlords have drastically different tax rates but charge roughly the same rent. Same deal with gas stations: you can't figure out how much property tax they're paying based on the price at the pump.
In fact one of the main reasons California has rent control is that Howard Jarvis promised renters that landlords would be nice and pass along the cuts. Of course this was a lie and in the early 80s cities lashed out with rent control in response.
Austin also has hundreds of miles of land around it in all directions. Coastal cities are always expensive because of the geographical barriers causing over half of potential lands to be water and having a lot of bottlenecks to get into the city
Homelessness isn’t really caused by housing prices, people just move to worse places or get roommates. Crime definitely isn’t caused by housing prices, it’s plunged as housing prices have soared over the past 30 years
That correlation analysis is not good, you've got N=1 there and an astronomical number of confounders. A better analysis would be to look at inter-city or inter-municipality variability in crime and correlate that with the cross-section of housing price changes. You'll have a rich N=50 to N=5000 dataset.
I don't agree with your assertion that homelessness isn't caused in part by house prices. That seems unintuitive to me. Yes some people will get roommates, but what about people that already had roommates and were barely meeting rent? Some of them will have the foresight to get up and move interstate before they get wiped out, but there's frictions and costs associated and not everyone will succeed.
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OT: I thought that I would not see this in mid-2021.
I still see this on a bunch of US news sites. At this point, I'm just assuming that corporate (at these sites/companies) decided the upgrade was not worth it, and it's easier/cheaper to just block European readers.
Right now there are a total of 5 houses or townhouses under $2.5M listed for sale in Palo Alto with the cheapest being a cute 1200 sq ft 3BD/2BA house for the low price of $1.68M.
The Palo Alto/Los Altos/West Menlo Park areas have fought hard to prevent housing development (NIMBY!). Recently a small number of luxury homes were built in the Barron Park part of Palo Alto. The homes sold quickly for $4.5M and up. Meanwhile, on the same small street in Barron Park, there are currently five homeless people living out of their cars and three trailer homes. They use the adjacent park's open public bathroom.
I don't think the departure of Tesla HQ will have much of an impact on the town, which is a shame. Something bad is festering beneath the pristine surface here.
I know some people like to make this political, and I know that the real reason is probably a simple mix of cheaper land, lower taxes and thus hoping to raise profits, but I personally think this is a great thing.
California is saturated, it's nice to distribute things amongst the states more evenly. There's already so many people and high value tech companies in California.
Note that Musk moved the HQ to Austin, one of the most liberal cities in the US and probably the most expensive in Texas, and not for example to Fort Worth, a conservative city next door to Dallas. The fact that TX doesn't have a State income tax or a carbon capture tax but California does, will have also been a factor I'm sure.
Which ones specifically? The only two I know of are:
- The low/zero emission car rebate that Toyota and every other manufacturer has used.
- The clean energy manufacturing tax write off that applies to over a hundred other companies.
I don't think California has given Elon any significant subsidies. When Tesla asked states to compete on the Gigafactory, California lost to Nevada.
Write offs isn't the right word here. It's a partial tax offset for purchasing manufacturing equipment. The tax itself is already high, so the partial exemptions on that tax isn't some give away.
I mean, if they want cheaper housing and plenty of space for factories, they could always look at Michigan.
But then they'd have to make cars that understand ice and snow, and autopilot is much easier to sell if they can pretend freezing weather doesn't exist....
The https://www.tesla.com/contact page should have been updated at the same time as the shareholder meeting announcement as it states the HQ is still in CA.
California's tax regime is really backward. I suspect Tesla's departure is just the tip of the iceberg and that the repeal of the SALT deduction in 2017 really hastened this trend.
High earners pay an effective tax rate of > 50%. They are partially picking up the slack from Prop 13, which artificially distorts the housing market by allowing longtime homeowners to pay property taxes based on decades-old assessed values while sitting on millions in equity gains.
So young, high earners see the state taking a massive chunk of their paycheck in exchange for middling infrastructure and pitiful public schools while simultaneously putting its finger on the scale of a wildly inflated housing market.
The exodus will only pick up steam unless policymakers get their act together.
By More fair, I mean, CA has a similar tax rate across incomes, but does place more burden on top earners than TX does.
TX on the other hand, is unfairly taxing people more at lower incomes, and less for people at higher incomes.
TX policies don't align with my moral beliefs–I would not decide to raise my children there given the way the state is governed. That's of course a personal opinion, but I don't want to spend the rest of my life fighting for rights that we have in CA.
I disagree with that article (which repeats the ITEP WhoPays report). It incorrectly assumes that the incidence of the property tax is on the renters that occupy a house rather than the landowner. If you think that property taxes are more regressive in Texas than California you would predict that poor people pay more for rent in Texas than California, when the truth is the reverse. And if you think that property taxes are regressive, you would predict that low property taxes reduce inequality, but the truth is that California’s low property taxes only enrich landowners at the expense of the poor and are the biggest source of inequality. The property tax is a rather progressive tax insofar as its incidence is on those who gain from excluding others, while it allows taxes on labor to be low.
Rents in CA (bay area in particular) are a function of demand more than landlords' cost. When rents in CA go up by 40%, I guarantee you that's not because a landlord's taxes went up by 40%, but because demand has shot up and landlords can extract more profit from their renters. The big pandemic rent cuts in SF give a glimpse of what reasonable rents could look like here, if supply met demand (though even the lowest pandemic rents are still higher than they should be here).
I agree that CA's housing situation does often enrich landowners at the expense of lower-income folks, but my take on that is that's more caused by NIMBYism and an unwillingness to build enough housing to meet demand. The Prop-13-fueled property tax distortion certainly plays a role, but I don't think it's the dominating factor. CA's property taxes are lower (by percentage of home value) than the national average, but not by all that much, on the order of a tenth of a percent or so.
Property tax is absolutely not a progressive tax, by definition: everyone pays the same rate based on the value of their home, not based on their income or means.
> Rents in CA (bay area in particular) are a function of demand more than landlords' cost
Exactly. In other words, especially where supply is constrained, the property tax is incident on the landowner rather than the tenant.
> my take on that is that's more caused by NIMBYism and an unwillingness to build enough housing to meet demand
Yes, the difference in land use is bigger than the difference in tax rates. However, when property taxes are higher, there is more incentive for cities and households to allow more housing. And even if you believe that property taxes are regressive, it should give you pause to realize that it is more than made up for by California’s bad land use restrictions.
> Property tax is absolutely not a progressive tax, by definition: everyone pays the same rate based on the value of their home, not based on their income or means.
No, that’s just who writes the check. You had it right the first time. The tax incidence is who bears the burden of the tax. Since property taxes are capitalized into the price and the supply is not very elastic, an increase in projected tax payments (due to an increasing rate or increasing property value) are largely borne by the landowner (in the form of a lower sales price or a sales price that grows more slowly) rather than the young worker who buys/rents it.
Take a look again at the graphs in the article the GP posted[0]. Texas's tax scheme is about as regressive as it gets. Sales and property taxes are regressive. Income tax with marginal tax brackets is progressive. This is a pretty simple concept.
> However, when property taxes are higher, there is more incentive for cities and households to allow more housing.
True, and what tends to happen in CA is that cities will approve commercial development over residential, since they can get much more tax revenue out of commercial property.
But I don't think CA's property taxes are too low; from a little searching it seems like CA's average property tax rate is only slightly below the national average. Meanwhile, Texas' clocks in at several multiples of the national average.
I'm not really sure what you're getting on about with the rest of your post, though. Property taxes, as implemented pretty much everywhere in the US, are regressive. Full stop. It doesn't matter "who writes the check". Landlords will pass on the cost of property taxes to renters. I don't really see evidence that home prices are so much lower in Texas due to the high property tax. Lower, certainly, but I would still much rather buy a house in the bay area with its inflated prices over a house in Austin.
And I expect as demand goes up in Austin, home prices will go up (if slower), and tax rates will just help make homes even more unaffordable there for lower income folks. I expect it's easier to build in Austin, but it still takes time, and likely any new demand for housing in Austin isn't primarily in the outskirts of town where things are cheaper.
> Sales and property taxes are regressive. Income tax with marginal tax brackets is progressive. This is a pretty simple concept.
Not true. Income taxes (as implemented in the US) have enormous blind spots that favor homeowners at the expense of renters: untaxed imputed rent and the capital gains tax exclusion for your main home. These undermine the claim that the income tax is more progressive than the property tax.
> Landlords will pass on the cost of property taxes to renters.
Not for the most part. The question is, when the property tax increases, how much of it is eaten by the landlord (in lower post-tax rent), and how much is a burden on the tenant (in higher gross rent due to reduced housing supply)? In California where supply is inelastic, I would argue that the low property tax is almost all a windfall to the landowner rather than the tenant.
CA income taxes are incredibly progressive. WA is actually in the same boat as TX in regressive taxation (sales tax), but is a liberal rather than conservative majority state. However, any attempt to institute an income tax is shot down by the voters fairly quickly.
22% isn't nothing, certainly, but I wouldn't say it's "much" higher. And it looks like Austin's tech salaries are going up YoY at 4x the rate SV's are.
I work in tech, despite California being the center of that industry, I've resisted relocating to there every time. I don't much care for it. Tastes vary. If the housing market wasn't so fucked it might be a different story.
Musk has not paid any tax because he hasn't cashed out any of his stock options yet. Some of his options will expire next year so he will pay tax then, but I am sure California will get the lion share of the tax revenue (as Musk lived in California up to 2021.)
And yes indeed, the taxable event is vesting, it indeed happens outside of ca, and yes CA still intends to tax you! They will even come after you in another state for it, after you permanently move out.
Isn’t any equity he is awarded for the period of work he did as a tax resident of California, taxable in California, regardless of whether those gains are realized today or in 20 years?
Equity is taxed on sale. He will never sell it. He will give it to a bank and take a loan against it. When he dies bank can sell it and pay itself back.
I really don’t think this is true. Being granted the stock is a taxable event, even if you don’t liquidate any of it, and even if that means you have to sell some to pay the taxes.
Also, the methodology you’ve described for avoiding taxes is used to benefit from offshore holdings, not avoid paying taxes on locally held assets.
This scheme finances the personal spending of every American worth more than $50M. Sure, any time they're sloppy enough to personally receive real income, they pay taxes on it. Usually they are not that sloppy. The income goes to shells or other assets in which they've "invested". The assets become more valuable, and thus can be used as collateral for larger loans.
I’ve worked with organisations that trade SLOCs other types of instruments that are typically used for these types of transactions. They can be used to defer taxable events in some cases (by taking a loan today instead of selling your shares/options), but there’s no way to use them to avoid paying taxes on local assets. This is especially true with Musk, because he’ll have to sell expiring options soon, which will be a taxable event no matter what.
The only way they can be used to avoid paying taxes all together is if you’re trying to derive income from assets held (usually secretly) offshore, and this is almost always criminal tax evasion. The only thing they’re achieving in this circumstance is basically an international fund transfer without creating any taxable income. There are no secret tricks you can do to transfer your assets beyond the control of the IRS, you can’t “give” them to a bank, and if they’re collected as collateral on a defaulted loan, that’s a taxable event too.
Companies can get away with moving their profits to other jurisdictions, because a collection of subsidiary companies can exist in as many different tax jurisdictions as you want. Individuals can’t (legally) do this, especially not US citizens, because they remain US tax residents for their entire lives, regardless of where they live or work.
A lot of billionaires don’t pay a lot of taxes every year, because they don’t have a lot of income every year. The only way to turn it into a scandal is if you ignore all the years in which they do pay a lot of taxes. Which is, of course, fundamentally stupid.
His tax avoidance is even more striking if you examine 2006 to 2018, a period for which ProPublica has complete data. Bezos’ wealth increased by $127 billion, according to Forbes, but he reported a total of $6.5 billion in income. The $1.4 billion he paid in personal federal taxes is a massive number — yet it amounts to a 1.1% true tax rate on the rise in his fortune.
Why should we ignore these 13 years over which Bezos made $127B? Who would benefit from that?
Because the wealth of Jeff Bezos according to Forbes is just the amount of Amazon shares he owns, multiplied by the price of the stock on whatever day it was that somebody at Forbes decided to work out how much he was worth. Bezos, just like you and I, pays tax on his income. He only gets taxable income from the value of his Amazon shares when he sells them, which like most founders, he doesn’t do very frequently.
You’re literally just getting upset at him for not liquidating his entire position of Amazon shares (or options) every year. If he ever wants to turn the theoretical number some Forbes intern came up with for his net worth into income, then he’ll have to pay tax on it. He could theoretically live the rest of his life without selling his shares if he wanted to, just like you or I never have to sell any shares, or property, or any other type of asset we own. However if he did that, the IRS is going to come and take the tax he owes from his estate.
There is no tax evasion taking place here, this isn’t even a loophole. It’s the same treatment everybody gets.
You don’t have to sell your assets if you don’t want to, and you don’t make a taxable profit from selling your assets… unless you sell them. The propublica article you’re quoting is designed entirely to rage-bait people who don’t want to think about the topic long enough to figure that very basic fact out.
I am not "upset". Since there is no literate reading of this thread that would yield such a conclusion, I suspect you might be projecting... I don't claim this is tax evasion. ProPublica didn't claim this is tax evasion: "Certainly, there are illegal tax evaders among them, but it turns out billionaires don’t have to evade taxes exotically and illicitly — they can avoid them routinely and legally." When rich people write laws, they usually don't write laws they'll need to violate.
Since most people don't own billions of dollars worth of shares in giant firms, this "treatment" is certainly not what "everybody gets". Not even the billionaires' most ardent online white knights get this treatment.
Wouldnt the interest on the loan be greater than the taxable event?
Even with interest rates low, the prime rate is 3.25 [0]. So isn’t it worse to pay 3% interest per year than a 15-25% capital gain once? I assume Musk thinks he’ll live more than 10 years.
Interest payments are deductible. [0] The scheme was described by ProPublica earlier this year. [1] If they sell stock they lose the control over the firm that stock represents. That would be fine for normal humans, but not for the super control freaks under discussion. The interest, which is certainly lower than "prime" for borrowers like this in the era of zero-benchmark [2], is typically paid by future loans. It doesn't hamper the lifestyles of the rich any more than it benefits the public treasury.
Not sure why the downvotes, this is 100% what is going on the the top of the top 1%.
Which is why the current congress push to ramp up capital gains to get money back from the rich is super super misguided. It screws startup founders like myself, but it literally has no impact on the mega rich.
Eh, downvotes happen. (Admittedly, I'll be less enthusiastic about sourcing in the near future...) I suspect 'AmericanChopper has learned something ITT, which was the point. He had a particular understanding of this practice, which had been imparted by someone he trusted. Now he knows that understanding was... incomplete, let's say.
ProPublica can bang the drum all they want. In USA, the big media firms are all controlled by very rich people who don't want this sort of story to stay in the mainstream consciousness for more than a couple of days. So, information like this disappears more quickly than the average citizen can understand it.
Sure, though, they probably weren't one of the wealthiest people on Earth that could afford ton of accountants and lawyers. Billionaires aren't known for paying taxes, so pardon me for being skeptical.
Depending on the grant type receiving it might not be a taxable event. And even otherwise, in a lot of cases the majority of income is realized in the form of capital gains.
Maybe, although I would imagine Tesla's the premiere destination for fresh triple-star college graduates that don't mind taking a pay hit to work for Tesla (and burn out after 3 years.)
Or California's housing market is just too fucked. I think this is more plausible than the income tax too high theory.
I was on the job market a few years ago and on a whim decided to look at the careers sites of SpaceX and Tesla. While there were openings that were interesting to me, both companies' listings had spelled out in clear terms – this job is for people who are passionate about the work. You will be expected to work long hours, nights and weekends. This is an exempt position so there will be no overtime pay.
Musk isn't eligible for ISOs, so any options he gets are taxed in the year they are exercised. Sure, he can avoid exercising them, but options nearly always have an expiration date. And assuming the stock price has gone up since the options were granted, the taxable amount will be even higher upon exercise.
CA also has some fairly unique (and IMO unfortunate) tax rules where they will still require you to pay taxes on some things even after you've moved out of state. I believe option exercise (for options granted+vested while living in CA) is one of those.
Resource driven economies like Texas can maintain a low income tax by deriving most of their tax revenue from property taxes and taxing oil and gas revenues.
IMHO the high income tax regime found in California is actually a function of high density, high income, knowledge based earners moving in.
If enough of them arrive, demands for services (schools, fire, police) and infrastructure (i.e. light rail, etc.) will increase. The original NIMBY locals will initially love the increasing property values and new restaurants... until their property tax bills start rising to astronomical sums.
The state will then need to push for Prop 13 like property tax capping legislation at which point the state legislature will need to raise funds somehow and magically they will end up with a 10%-20% state income tax on super high income earners like Elon, et. al.
That said - just a IMHO prediction and just saying that you can't blame it entirely on just California(ns) being dysfunctional. :)
California actually spends less per student on education than even many poor states. For all their virtue signaling about public transport, CA don't even have universal school bus service (which is table-stake in most states). Most parents drive individually and drop kids!
Just compare the building/facilities of any top bay area public school with that of Texas. The former look like shack while the latter look like mini universities. Bay area schools still rank higher because of students and parents, its nothing to do with the state.
> The former look like shack while the latter look like mini universities. Bay area schools still rank higher because of students and parents, its nothing to do with the state.
Palo Alto High School is literally a mini university. Just do a google image search. You can't tell it apart from Stanford.
Property tax values or property taxes? If Austin is like other cities, then if houses all rise the same amount of value, then the property taxes assessed remain the same (the percentage goes down). Any increase in spending (and therefore raise in revenue from property taxes) would have to be done explicitly (they don't just get a windfall from rising property values).
Honestly, coming from a third world country where I got taxed more and having had to work in Austin and Atlanta before on previous jobs, taxes are the least of my complains for California. Yeah they should fix property taxes... but my main complaint is that even though all politicians like speaking a mouthful about helping the poor and how broken healthcare is, every single government program that's supposed to help the mentally ill is utterly and completely broken beyond belief. And I'm saying this coming from Argentina that as a country has around the same population and way less GDP.
Literally the only thing about California that doesn't feel "first wordly" as all the nice places in Europe I've been to is how it deals with people that need mental health or that have housing issues. I tried discussing this with every other politician I meet or something but besides condescending smiles because of the perceived trauma they think growing up in Latin America caused (it didn't) I never get any iota of acknowledgement that something in the world is wrong. Except for the Republicans, which is the only problem in the US, apparently.
Not a lot of people hitting that regularly, but I imagine it can sting a little if you've got a more proletarian salary normally and are hitting that region just once because of say, a start up liquidity windfall
I’ve long suspected that the Democratic obsession with federal policy is to try to reduce the appeal of other states where companies may want to move.
It’s often seemed like people in California would prefer that a manufacturing operations operate in Asia and come through their ports rather than operate in the middle/south US.
Tax havens are bad for the places where economic activity actually happens. From California's perspective, I don't think it matters whether that haven is in Asia or the middle/south US. It's just as bad for California either way
Naw, Cali just wants clean air and water, and manufacturing doesn't want to pay to not screw the planet. That's why companies pillage Asia: their environment is for sale to the lowest bidder. Capitalism without regulation, baby!
You're making the same conservative argument about wages: if you pay a living wage companies will flee. No, if a company can't pay a living wage, it shouldn't exist. Likewise, if a company can't manufacture products without destroying the environment, it shouldn't manufacture those products.
There are some really great public schools if you can afford to live near them, but that's certainly not true on net. Otherwise California wouldn't consistently rank among the bottom half of US states for public schooling.
It's really not the school that determines outcomes but the home life. You have a lot of kids in LAUSD who have no real role models at all in their lives and come home to terrible situations every day, which makes the school district look bad but its not really something the school district has any power to solve short of offering boarding school for at risk kids.
The Chetty study says it's not just the home life, it's the whole neighborhood. And whether the majority of families in the area are single-parent homes or not.
The schools are not nearly as good as they should be for the income in the areas they're in. You would think that in an area where the average home is over $1 million every school would be a 10/10, but it's far from that.
Bay area public schools are horrible. I live 15 mins away from Apple HQ and all you need to know about our assigned elementary school is that it has metal detectors on the entrance because of the gang activity.
That has nothing to do with the schooling and everything to do with the homelife these impovershed students experience after the bell rings. If you are a good role model to your children they will do fine in public school and not join gangs or drop out like those whose only role model is their cousin who got out of prison and is trying to recruit them into a gang.
By that website, the lowest ranked state is California (83% graduation rate), the second lowest ranked state is...Texas (84% graduation rate). So...California is slightly worse than Texas on schooling?
I wonder if something else is going on for California and Texas to rank behind Mississippi, Alabama, and Louisiana? I'd bet that the issue with the standard of measure, not the actual quality of education.
I disagree with that metric, because many students should not finish high school — I think the graduation rate is too high in every state. I would compare states based on testing performance, keeping in mind California’s demographics and the absurdly high number of kids who don’t speak English at home.
I should say I think its schools are fine, rather than great.
Hell, in SF that first bit doesn't even help, due to the broken lottery system here. It's probably the main reason why there are so few children (by percent) in SF when compared to other cities. Parents make the logical decision to move out of SF when their kids become school-age because they have near-zero control over the school their kids end up at. Alternatively, they put their kids in private school, which is out of reach cost-wise for many families.
The SALT deduction wasn't repealed (for which a coherent argument could be made, though it would still be a bad idea), it was capped (for which there isn't even a principled argument.)
> High earners pay an effective tax rate of > 50%.
“High earners pay high rates” isn't exactly a sign of a backward tax regime.
California has the highest income tax rate of any state. So... any state with comparable or worse infrastructure. And there's quite a few of them [1] [2] [3]
There were literally rolling blackouts in CA last summer and the state came dangerously close again this summer.
Edit: Not sure why everyone is assuming I'm saying Texas is somehow better. I'm well aware of the power grid problems there as well. The question was "in comparison to what" and setting aside CA and TX, at last count there are 48 whole other states in the nation.
The exodus has been soundly proven to be a myth. [1] But assuming it isn't, there aren't many better places to go. Texas is a joke. Traffic is worse than LA in the major cities and it is run by Christian zealots. Yeah maybe you pay fewer taxes but the other quality-of-life tradeoffs aren't worth it.
What about Puerto Rico? I moved here 6mo to take advantage of the lowest taxes an American can get and it's pretty livable. Of course English is spoken as a second language, but all in all it's pretty livable
There are better places to go, hypothetically. Realistically: People are going to Texas. Obviously they are; ranked by GDP per state, California is #1, Texas is #2. The only people who give a shit about the Christian zealots are people hundreds of miles away outside the state; people like Elon Musk don't care, and still move there, and move their companies with them.
> The only people who give a shit about the Christian zealots are people hundreds of miles away outside the state
That seems untrue, given Texas' shift toward purple. Certainly wealthy people in Texas (regardless of their politics) aren't affected too much by who sits in the state house, but there are plenty of Democrats in Texas who aren't wealthy.
And just as a random example, I bet women who are looking to terminate unwanted pregnancies in Texas right now are probably sick of the Christian zealots.
I don't know which people like sitting in traffic. Wide roads is a sign of sitting in traffic.
Family wise though, moving to Texas is bad for half the members of your family. Half the people in your family, aren't going to agree with the Texas government's views, whether you want to force them to or not.
Recently moved to north of Dallas. Many wide roads, very populated area. Rarely see traffic that slows trip time more than 10%. Much better than my experience driving in Seattle and what I've seen in SF/LA.
The speed limit on the freeways and tollways is 70 mph, so distant places that would take over hour to get to in Seattle are 15 min drives here.
If you think the abortion debate is as simple matter of "men vs women", you obviously haven't looked up the facts, otherwise you would know that men and women in the US oppose abortion in roughly equal numbers.
I feel like this should be obvious but wide roads don't imply sitting in traffic. If traffic is 1.5x but road width is 2x then you're less likely to be sitting in traffic.
>Not to mention the a worthless human being of a governor. Backwards politics and ideals. It's a joke of a state, everything wrong with America hyper-concentrated on steroids.
There are millions of people who think this exact same thing about California.
You need to spend less time on the internet. You’ve worked yourself into a frothy rage and I suspect the only think you know about the state is what you’ve read online.
These laws and politics have real effects on people's lives. Just because you personally are comfortably removed from them doesn't mean that they aren't problems.
I don't think anyone disagrees with that point, but if you're expecting to have productive discussion here, and not be downvoted and flagged into oblivion, I would suggest you frame things in less inflammatory and absolutist terms.
It's stuff like this (from another post of yours) that shows your ignorance of people's views:
> If someone can't agree that (a) the current state of climate change is bad, and (b) women deserve bodily autonomy, their opinion simply doesn't matter to me. IMO they also shouldn't be around women.
I agree that women deserve bodily autonomy, and I'm fine with abortion if it's a choice made freely, but there are tens of millions of women -- 43% of women in the US[0] -- who believe abortion is wrong. Not sure how many of them also want to impose that view on other women who don't share their views, but I expect that number still ranks in the millions. Should those women not be around... themselves?
Life is terrible for poor people. Software professionals are living high on the hog in Austin. If you turn off the news and live locally things are far better for the cohort that reads Hackers News.
This would be a complete non-story if not for the propaganda-driven political climate that needlessly and divisively pits "red states" against "blue states".
Not sure why this comment is being down-voted, but I do agree with it somewhat. As an outsider, I see other states like Washington state also having no state income tax, but none of the kind of writing when companies move there or form there instead of California.
I am curious if there are any Tesla Palo Alto employees here. Wondering if this is also paired with moving their eng team ? Otherwise, feels like a symbolic move by Elon almost as a response to the factory shutdown last year. He also said that they are expanding Fremont production and they recently announced a new factory in Lathrop. Weird move, but whatever
California's housing issues have been compounded by the spate of fires in recent years and they have 12 percent of the overall population of the US but 25 percent of the homeless population.
California's housing issues are complex and not likely to be remedied quickly. This sounds like a completely reasonable plan at first glance.
I think that people living in these high tax and spend states are starting to ask that what are they getting for paying these high taxes. For example New York spends 9000 per person as part of their budget whereas Texas spends around $3700 per resident. Are the services rendered in NY really 3x better than those in TX.
It would be interesting if these huge companies started funding the creation of new cities in Nebraska or something. Somewhere with tons of land, centrally located, they could fund some amazingly large airports to get anywhere…
Low income taxes are good for employees and very lax labor laws are good for the company, but both aren't good for the employee and the company isn't affected by the former.
With these moves I understand the companies might have good reasons for that (costs, nu-favourable laws, etc.) but it always bothers me what happens to the employees ?
Do they just "raise the anchor" and move with the company (if they do actually physically relocate, which does not seem to be really the case in this instance) ?
Maybe that's normal in the US but the though of having to leave your friends, parts of family family, house/flat and familiar environment in general because your company decided to relocate somewhere else is frightening! Of maybe that's just my central-European perspective.
Combined with the demographic changes, Texas is sure to go blue. However, the blue party doesn't really seem to be a homogeneous philosophy. Same with the red party. Maybe we'll finally see a challenge from a credible third party that will take the center and leave the fringes for the red and blue.
Anyone have a running list of enormously rich people moving from California to Texas to avoid being taxed on a windfall and ostensibly justifying it with insert reason here?
So far I have Joe Rogan with his spotify deal and now Musk with some of his options coming up for payday.
Both will have to pay CA taxes regardless. The California tax board does not mess around. Rich people are generally more afraid of them than the IRS (which has become toothless in recent years).
Rogan won't have to pay california income taxes if he's left the state and a resident of texas when he is paid income from spotify. This move saved him 13 million dollars (1). If musk moves before he vests options he's not getting taxed by the state of california for vesting in texas.
The plan was hatched when they smoked that joint together. Great state to move to if you want to avoid taxes on capital gains and if you want to build factories doing whatever the heck you want with no worker protections.
If you really think of it - one of the main reasons Musk started in CA was because thats where his client base was to get the homegrown advantages for clientbase, talent and green benefits/cred. Now since his base has moved globally, he is moving to the lowest cost of operations (read: Texas). And to be fair - it would be very difficult to upsize any of his manufacturing capabilities in the bay area. The fact that he even has a major facility there is kind of impressive.
Here's another point to consider: the Trump tax "cuts" in 2017 were in fact a giant middle finger to college-educated workers in coastal blue states, in three major ways:
1. The $200-500k Federal tax bracket actually went up;
2. Loss of the SALT deduction. There are 9 states without state income tax. Most of them are red (Washington is a notable exception). This disproportionately hits blue states; and
3. Reducing the cap for the mortgage deduction, which again only affects expensive states.
We have a hung Senate, essentially. A better description is to say that it is controlled by Charles Koch, who owns Joe Machin and the Republican Party.
So these tax hikes on blue states haven't been rolled back under Biden because of Charles Koch, basically. In the proposed bill, the SALT deduction isn't getting reinstituted, the mortgage cap is the same and the corporate tax cuts (you know, the ones that will trickle down) are only getting partially rolled back.
And even that might not pass.
But what this means is that there is now a huge financial incentive for workers in California and New York in particular to move south. Hell, it was a significant factor in me moving from NYC to Florida, as an example.
But I wonder if the unintended consequence of McConnell's and Trump's giant middle finger to the blue states could be the migration of left-leaning voters to Texas, Florida and even Tennessee and Georgia (GA has a state income tax but Atlanta is cheap compared to CA/NY).
Perhaps Tesla's move is part of that trend.
It would be entertaining, to say the least, if this hastened the political extinction of the party of Trump. The trends were such that Texas is likely to be a battleground state in ~10 years as it is.
Fta: He added, “It’s tough for people to afford houses, and people have to come in from far away....There’s a limit to how big you can scale in the Bay Area.”
Warning: This post is written from a libertarian/center-right viewpoint.
While this move is great, I'm skeptical of the idea that moving to Austin is a political panacea for moderate/center-right/libertarian governance.
- The same percentage of people who voted for hard leftist candidates in SF also voted for hard leftist candidates in Austin. Don't believe me? Check it out for yourself: https://en.wikipedia.org/wiki/2020_Texas_Democratic_presiden... This means that, fundamentally, people in Austin believe the same things that people in California do.
- There are homeless issues in Austin, just as there are in SF (though not as bad as SF, it's getting worse every year).
- Many people don't realize how regulatory constrained Austin is for new buildings/housing. The same NIMBYism exists in Austin too, just like SF! But this isn't surprising since people in Austin basically have the same politics as people in SF. The only reason why rents are cheaper (though that's changing as more people move in), is because Austin isn't as big as SF. If all of the intelligent tech people moved to Austin, it would have the same supply & demand problems that SF has (since you'd have the same number of people mixed with the same regulatory constraints on new housing supply).
- Yes, it's true Austin is a place with zero income tax and fewer business regulations, but that's only because it's held at bay by the surrounding red regions of Texas. But it's only a matter of time before Texas turns blue. So in the long-run -- when the state house will be controlled by the same party running California -- why would you expect tax rates and regulations to stay low? In 10 years, Texas will have the same political makeup (at the city, state, and federal levels) as California!
- The bulk of taxes and regulations aren't at the state/city levels. They're at the Federal level. A zero percent state income tax is cool, but it only goes so far. Is the entire tech ecosystem really going to sustain this movement for a mere 10% drop in total taxes? The SF/NYC network effects are still very strong. I'm not sure such a marginal/incremental decrease in taxes is enough to affect this sort of change.
Power to Tesla though. I really, really hope to be proven wrong.
This parent comment from jeffbee is pretty obviously correct. There are more homes and they cost less and... amazingly, there are fewer people without homes.
People get this logic when you talk about, say, Ferraris. Of course not everyone has one! They cost a lot of money!
But with housing it's like "no! It must be drugs! Or they don't work hard enough! It can't have anything to do with the cost of a home being nearly a million dollars!"
It's less about ideology than about the impact of entrenched power. For all the leftist rhetoric in SF, interest groups like property owner, landlords, etc., have political power sufficient to preserve the status quo.
I think the geographical constraints of SF (water all around) amplify the power of the above groups at the expense of others. Austin may have more space to gradually expand and spread out in a way that is more equitable and does not so disproportionately reward those who were there first.
That's true. But leftists are entrenched in Austin as well at the city level. I suppose, at the state level, once the state flips blue, the "default"/status-quo position will still be more low-tax/low-regulation, and that's an advantage for Texas (again speaking from a libertarian view point; I understand you won't agree if you share a different politics).
It still seems to me that Austin will converge to SF, given enough time, given that the people in both cities believe the same things, and in only a few years Texas will be blue.
How does this save or make Elon Musk money, personally? Because that seems to be the question that underlies almost every major move Tesla has made since Elon took over.
You know Elon has run Tesla from like... practically the ground floor right? He bought a controlling share like 8 months into the company history and has been CEO since 2008.
Given that half of Elon's wealth is Tesla stock, what makes Elon money is pretty much inseparable from what makes the company money. Weird thing to complain about.
I think GP's point was more about wondering whether this change is beneficial to the company, or mainly beneficial to Elon. I think that's a very valid question.
I know this is charged but it's genuine question due to my ignorance - why are companies having or moving HQs to Texas?
It feels that :
1. It's way out of temperate climate that one would live in when given full choice and all things equal (understanding they never are of course - I live in great white North :)
2. Politics are highly conservative and frequently invasive. now clearly half of Americans like it that way,but still,seems odd for largely progressive company like Tesla that's ostensibly working to put oil industry on defence... And that's not even allowed to sell there.
Taxes?some quid pro quo to get sales in? Something else?
Cost of living is one of many reasons. Highly sought after tech workers (like all workers) would prefer not to hand a huge portion of their salary straight over to their landlord. And tech workers, unlike most workers, actually have a bit of leverage under current market conditions to demand stuff.
Texas actually has some of the highest property taxes[1] in the nation, which (unintuitively to some) helps keep down the price of property. Countless studies (can share links if you like) demonstrate that property taxes (and land taxes in particular) are capitalized into the price of land.
California has some of the lowest property taxes, which when paired with Proposition 13, means it has some of the most expensive real estate in the nation.
Am I misunderstanding or are you basically saying that the monthly cost of housing is roughly equivalent so more taxes = lower home prices, such that taxes + principal + interest is the same in both places?
To clarify a bit: The monthly cost of renting a house is way higher in California, not because it costs more to rent the house, but because it costs more to rent the land the house sits on.
Property tax taxes two things -- the house, and the land. The portion of the tax that taxes the land is capitalized into the selling/renting price of the land, which is to say that causes it to cost less to buy the land and less to rent it. (The portion of property tax that taxes the building can actually be passed on to tenants (unlike the land portion of the tax) and serves to make building things more expensive, and that is bad, but since the majority of the price of houses in most urban areas is just land value, the land portion of the tax makes it a net gain).
>To clarify a bit: The monthly cost of renting a house is way higher in California, not because it costs more to rent the house, but because it costs more to rent the land the house sits on
Rent is not really tied to land in CA. If it were, a 1br in an apartment complex would be cheaper than a 1br detached unit since you are renting less physical land, and while much rarer, both 1brs tend to be about the same prices. Biggest factors influencing local variance in rents in California seem to be quality of neighborhood which is proxy for access to high paying jobs, fit and finish of the unit, and size of the unit.
> quality of neighborhood which is proxy for access to high paying jobs
In other words, the value of the land (which is to say, the value of the location). To be clear it's not the amount of land, it's the value of the land in particular places (especially urban land next to valuable jobs).
If you think land (location) isn't a big factor, perhaps you could explain why in the heart of San Francisco this 2,300 sq. foot EMPTY lot costs $2 million:
This doesn’t make sense. You’re saying that adding a cost (taxes) makes the total cost lower. The opposite is true. If you live in California and rent, there is no reason to expect that raising property taxes would make rent go down. Any portion of any cost structure can be passed to any participant in a transaction. All dollars are completely fungible. There is no reason to expect that additional land taxes would not be completely borne by tenants.
This is only the case if you assume that nobody will change their behavior as a result of tax increases. If you're increasing the tax on structures, sure, there's no reason to expect that these costs won't be passed onto renters.
When you tax land however, something different happens: underdeveloped land becomes a bad investment. If the taxes are the same on a single family house and a small apartment building, you're losing out on a sizable amount of money by not building the apartments (and the folks hodling vacant land are really losing out). So essentially the idea is that land taxes encourage landowners to extract as much value as they can from the land (and punish those who don't). In the Bay Area this most likely means building more housing, increasing competition, and driving down rents.
Of course, this is assuming that housing is legal to build in the Bay area, so this is most likely unrealistic
1) Very true, but unless you're an avid hiker or a marathoner, I'm not sure how big of a role climate plays in deciding a home.
2) Texas politics are invasive if you're a woman in need of an abortion, sure. But then, California politics are invasive for everyone who earns an income. If Texas politics are 'frequently invasive', then California politics must be downright suffocating.
Sorry, champ. Your news doesn't mean what you think it means.
Californians pay lower average property tax rates, but California's ridiculous housing prices mean that they pay more in property taxes. Median home value in California is $554,886, average property tax is 0.7%, for a (rough) average property tax bill of $3,884. Median home value in Texas is $207,301 with an average property value of 1.6%, for a (rough) average property tax rate of 3,316.
Californians also have a higher sales tax rate and an income tax, while Texas has no income tax.
Texas politics are infuriating in their lack of humanity, particularly for the disadvantaged but for the reader of Hacker News, you would hardly notice. If you live in Texas, it’s easier to ignore the politics and spend time and money helping those who are affected.
Corp taxes low, cost of living low (for now), HEAPS of open space (important for Tesla), UT Austin's compsci program (which is ranked) provides a good pipeline, engineers from the Bay are moving to Austin at an increasingly high rate, and demographics are shifting more progressive.
I think the writing is on the wall for tech in CA honestly
If the demographics of Texas is really shifting more progressive, then the writing could also be on the wall for Republican presidential campaigns.
Perhaps at that point the party will suddenly find itself again embracing the wisdom of the proposed Lodge-Gossett constitutional amendment, which got as far as approval by a super majority in the US Senate in 1950.
Because it would make presidential election outcomes more likely to reflect the popular vote (which is the morally right thing to do), and because it reduces the risk that small changes in big states create vastly different election outcomes (which is the strategically right thing to do, if you expect your opponent to cheat, lie, and start insurrections based on false claims).
i'm sure there are many reasons but it is far, far more expensive to operate in california than texas on any level, from personal to enterprise. texas also has cheap land, a sizable tech sector, and weaker labor regulations (all 3 tying back into the first thing).
I think there is a strange narrative that people assume Tesla as a company is a "progressive" company. It isn't. It is a company made up of many people - at their core they are an energy company that sells cars. Some staff are liberal, many are libertarian and some are conservative. Their CEO is a libertarian. I would wager there aren't many political progressives in the company TBH.
Also in terms of workers rights etc - I wouldn't put Tesla in the progressive category either.
HQ in Texas makes a fair bit of sense given Musk lives there and he can split his time more readily between Space X and Tesla. That and building out in Texas is incredibly cheap and the level of talent needed to stock up at this point doesn't need to be as capable as the early company building staff - its more operational at this point.
I thought I indicated that in literally next sentence;
Musk is building companies to change future and disrupt status quo in general (so opposite from the most generic definition of conservativism which seeks to preserve it) ; and specifically Tesla is a company that builds a product that in small way obviates what Texas exports and lives on
Elon has been a fairly outspoken critic of California's covid measures, as well as the state's cultural stance on free speech issues. He had previously threatened to move all of his business operations out of California because of covid restrictions, and now it looks like he is making good on those earlier comments.
Only for the richest people: Texas has lower state income tax but the local taxes more than make up the difference and so middle-class people end up paying a higher total tax rate.
Since the decision about where a large company's headquarters is located is typically made by someone on the ultra-rich end of the spectrum, they're optimizing for things which don't apply to most of their workforce.
Cost-of-living should be lower, but I think that's important to view in more specific comparisons based on exactly where you're going to live — someone coming from San Francisco is going to find almost anywhere in the country to be cheaper but California is a big state there are many places where the comparison is going to be much less stark, and might end up being a wash depending on your job prospects and quality of life factors.
Right. People don’t get this because tax policy is dominated by right-wing memes but tax load for median families is way higher in Texas. Property tax rates on the median house are higher, while the effective income tax on the median income in California is very little. Median income tax burden in California is ~$350/yr.
That seems way off… when I earned $16/hr way back in my early working days my CA state income tax was a hell of a lot more than $350/yr. $16/hr is under the median CA income afaik.
Does the median family own their house? If not, then property taxes are not a relevant issue and if your argument is “median income tax gains are offset/overshadowed by median property tax losses” then you’re just wrong.
They just built another massive warehouse near their Fremont plant and plan on continuing expansion in California. This move is just to get headlines, they are expanding everywhere.
As long as the California refugees stay in Austin and nowhere else the it’ll be fine. The problem is they bring all the issues they’re running from with them.
I'm sure female employees of Tesla (and wives of male employees, and daughters of employees), will be just thrilled to move to Texas so they can be subjected to Texas' new reproductive rights system, derived from The Handmaid's Tale.
I think California uses an "allocation ratio" to determine how much he will owe when he exercises those options [1], so he's not getting away tax-free.
100% predictable. They'll eventually move factories there as well, at least the ones where there are a lot of employees. CA is downright abusive to businesses. Only the highest margin Silicon Valley style businesses (which Tesla isn't) can survive in such a hostile regime, and only out of necessity - because that's where talent happens to live. As talent distributes more and more and companies move out, CA will run out of other people's money. Happens every time. That's why they're planning a wealth tax which you'll continue to pay for 10 years after you move out.
This will both alleviate pressure on the Bay Area as well as accelerating the political shift to the left in Texas. It's a win all around.
I actually think that living in the Bay Area as a tech employee is increasingly unjustifiable from an ethical point-of-view. It was once the case where that was necessary for many career paths but that's increasingly not the case and the pandemic has hastened that shift.
Why unethical? Because tech workers are contributing to the displacement of the people those places need to survive.
Example: I read an article about one of the Google bus drivers and what his schedule was. It was basically get up at 4am, drive for 2 hours to work, drive a bus for 5 hours, sit around unpaid for a few hours, drive for another 5 hours then drive 2 hours home. Why? Because he couldn't possibly afford to live anywhere closer.
You can argue that NIMBYism is rampant in the Bay Area and this restricts development of housing units and you'd be right. Yet the reality is you're still contributing to that displacement even though you're not responsible for those policies.
>Because tech workers are contributing to the displacement of the people those places need to survive.
>Yet the reality is you're still contributing to that displacement even though you're not responsible for those policies.
You're arguing that people trying to make a better life for themselves are ruining the lives of others? I think it's extremely clear that Californian's own tax policies, along with NIMBYs are to blame here, not tech workers.
But this is typical, myopic 'blame the catalyst, not the problem' I see frequently from west coast-style leftists (and i say that as a staunch leftist). Tech workers are easy to point at because they are new-ish transplants (most have been here >15 years at this point), and they are considered culturally distasteful, and moderately well off.
Nobody wants to blame the multi-million dollar single family home owning boomer who voted themselves a property tax exemption in the 70s that they can literally pass to their kids (from an ethical perspective, you should be appalled that we're currently living through the birth of an actual, landed aristocracy)
The tech workers are literally trying to make a better life for themselves. The NIMBY homeowners are literally hording wealth. Yet we blame the young tech workers... it's total nonsense.
> You're arguing that people trying to make a better life for themselves are ruining the lives of others?
100%.
> I think it's extremely clear that Californian's own tax policies
California's tax policies have been that way since at least the 70s. I'm thinking Prop 13 and rent control, which were essentially massive giveaways to incumbents at the expense of everyone else.
Your presence is support for those policies, both tacitly by supporting companies based there and directly with your tax dollars.
But I guess it's easier to wave your hands in the air and declare it someone else's problem rather than to acknowledge the part you play in supporting the system.
> Yet we blame the young tech workers
It's not one or the other. You can both be in the wrong. And you both are, for the record.
This is irrational. Though i am not a 'tech worker' my presence is actively trying to undo the harmful policies by being another vote to overturn the paradigm. Literally leaving does nothing but slightly delay the injustices that these policies perpetuate. Effectively brain-drain, but for the voting populace.
The displacement is going to happen with our without tech workers, because of the land use policies. Maybe not today, but as it stands, the region will likely never become more affordable. Blaming the tech workers for literally existing when the suburban tides turned back to urbanism is a trivially irrational post hoc argument.
The dirty little secret of SFBA tech workers is (IMHO) that they're not really liberal. They like to pretend to be and pay lip service to various social causes. They'll vote for the legalization of gay marriage (Prop 8) and recreational cannabis use (Prop 64) and will write checks to the ACLU and pet shelters.
But they'll also vote to protect their investments, being the significant amounts they have tied up in Bay Area housing. And if the campus workers, nurses and teachers have to drive 4 hours a day to get to work, so be it.
> Why unethical? Because tech workers are contributing to the displacement of the people those places need to survive.
Bay native here working in tech, and I'd argue that most SFBAY constituents are contributing to the NIMBY problem, not just tech workers. The vast majority of the workforce in the Bay doesn't work in tech, and they oppose new housing just the same.
The incentives just don't align for there to be a local solution to this problem. Unfortunately it seems this will have to be taken out of local control via bills like SB9 and SB10 that are slowly but surely chipping away at the problem.
So, it's obviously hard to define what the Bay Area actually is. The SF to SJ corridor is one definition but that excludes East Bay, which is significant. Probably the best proxy is the SF-SJ-Oakland metro area, which seems to have a population of ~10 million people.
How many of those are tech workers? It's hard to say. Here's one estimate that suggests there were ~400k in each of SF and SJ a few years ago [1].
Some of those will be single or married to other tech workers. Others will have partners outside of tech. Some will have children. I'd say for every person in tech there's probably 1-1.5 other people as a back-of-the-envelope type calculation.
That puts the tech population at around 15-20%, which passes the sniff test (at least for me) and is significant. Obviously not all of those can vote (eg immigrants are represented highly in tech) but many can. So we're talking about a group that could wield a lot of political power.
But they just don't it seems. My personal view is that Norcal tech workers as a whole are just as self-serving as the NIMBYists they like to point the finger at. I suspect that a large number of them are the NIMBYists at this point.
Tech being concentrated in the Bay Area certainly exacerbates inequality and cost of living increases, though the fault is less individual workers and more corporate leadership and VC firms insisting on concentrating there even when it might not be geographically necessary.
The sad thing though is that it seems even when you disperse highly paid workers who can work from home, inequality will continue even in other markets, see Austin, Miami [0], Nashville [1].
Then again, those markets were booming even before tech workers moved to there.
So let's talk about NYC as it's a place I know a fair bit about, having lived there for >10 years.
NYC is clearly an expensive place... kind of. Manhattan obviously is really expensive but there are 4 other boroughs plus the Hudson Valley, eastern New Jersey and Long Island that are all within commuting distance.
Even with NYC prices, I content that lower-income workers are significantly better off in NYC than the Bay Area. Let me give you a concrete example. I just went onto Streeteasy and found a 2 bedroom apartment in Astoria for $295k [1]. It's a 30 minute commute to Midtown [2]
Even better, it's by public transit so no need for added expensive of buying, parking, maintaining and putting gas into a car.
You simply won't find anything equivalent in the Bay Area.
> Then again, those markets were booming even before tech workers moved to there.
I don't think that matches the data. Depending on what segment you look at prices in the Bay Area have almost doubled since 2012 [3].
I agree with some of the points you've made in this thread but you cannot base a policy on unfounded anecdotes. I don't believe that Google allows any of its bus drivers to drive 10 hours per day, I don't believe it requires them to sit around unpaid every day, and of course, I don't believe this individual cannot find a bus driving job somewhere closer to where he or she lives. There has to be more to this story. To use it, unquestioned, to indict a company (and expanding that to indict the entire industry) is not valid.
Here’s the rub.. his job also goes away when those companies go away.
I still agree with you for a different reason though - if you believe that it’s a poorly governed place, at some point it becomes immoral or at least unwise to continue to sustain it with your tax dollars.
So you see this kind of argument in the current "labour shortage". Some people will say certain businesses can't afford to pay more and they'll fold otherwise.
I personally don't see the business owner earning an income (sometimes a substantial income) as justification for the workers to earn less than a living wage.
It's the same here: there's no good justification for someone commuting plus working 18 hours a day and getting paid for 10 of those hours.
"To be clear we will be continuing to expand our activities in California," Musk said. "Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory it's jammed."
But, he added, "It's tough for people to afford houses, and people have to come in from far away....There's a limit to how big you can scale in the Bay Area."
https://www.msn.com/en-us/money/companies/tesla-moves-headqu...