An apparel company CEO relocated his headquarters more than 1,300 miles from Southern California to Round Rock, Texas, joining a steady stream of businesses fleeing the Golden State's rising costs, regulations, and a proposed billionaire tax.
Hil Davis, who runs Digital Brands Group, an apparel and e-commerce company, didn't hold back about why he packed up and left. The company traded its space in Vernon, California, a small industrial city about five miles south of Los Angeles, for roughly 70,000 square feet of warehouse and office space in Round Rock, just north of Austin.
The cost for the new facility, Davis said, runs about the same as what the company paid in Vernon. But the difference in how the two states treat employers, he told Fox News Digital, is not close.
Davis put it bluntly:
"Doing business in the state of California sucks."
He pointed to a long list of burdens, high cost of living that forces employees into punishing commutes, rising operating expenses, and the mounting legal costs of defending against lawsuits. Round Rock, by contrast, offered lower costs, fast permitting for the new facility, a central shipping location for the company's expanding collegiate sports apparel business, and access to Austin's creative workforce.
Davis described a business environment in California where every additional cost compounds until the math simply stops adding up:
"You start to add all those things up. It doesn't work. It doesn't make sense. It's too hard."
Digital Brands Group still keeps some production operations in Los Angeles. Employees have to decide individually whether to follow the company to Texas or stay behind in California. Davis did not specify how many workers face that choice.
Davis's move fits a pattern that IRS taxpayer migration data has tracked for years. The latest IRS figures show Los Angeles County leading the entire nation in taxpayer losses, with a net 17,496 tax filers leaving for other states, and taking nearly $1.9 billion in income with them.
Four other California counties posted steep losses of their own. Orange County lost a net 11,618 filers. San Diego County lost 9,401. Riverside County lost 8,968. San Bernardino County lost 8,462. Those five counties alone represent a massive drain of both people and taxable income from the state.
Davis predicted the exodus will not come as a single dramatic wave. Instead, he sees a slow bleed that California's political class may not take seriously until the damage is irreversible:
"I don't know if there'll be, like, an explosion. I just think it'll be a constant leak."
The backdrop to Davis's departure is a live policy fight in Sacramento. California lawmakers are debating a proposed one-time tax of up to 5% on residents worth more than $1 billion. Supporters argue it could raise billions for health care and other public programs. Opponents warn it would chase major taxpayers, and their future tax revenue, out of the state entirely.
Even Democratic Governor Gavin Newsom has come out against the measure, warning that it could drive wealthy residents and investment out of California. When a governor opposes a tax hike backed by members of his own party on the grounds that it will accelerate an exodus already underway, the policy debate has moved past theory and into lived experience for businesses like Digital Brands Group.
Gabriela von zur Muehlen, chief policy officer at the Texas Association of Businesses, has argued that high-tax states like California and New York are pushing wealth, jobs, and investment toward Texas. The state's pitch is straightforward: no personal income tax, lighter regulation, and a political culture that treats business growth as a feature, not a problem to manage.
Davis's relocation is part of a broader corporate migration. Hewlett Packard Enterprise announced its own move from San Jose, California to Spring, Texas, a Houston suburb, where the company planned a new 440,000-square-foot campus. HPE CEO Antonio Neri cited business needs, cost savings, and employee preferences as driving factors. HPE already employed more than 2,600 people in the Houston area, with additional staff in Austin and Plano.
Neri said at the time that HPE remained "incredibly committed to Silicon Valley" even as the company moved its headquarters out of it, a polite hedge that captures the awkward position California's defenders find themselves in. The state still has Silicon Valley's concentration of technology talent and capital, a center of gravity that is difficult to replicate elsewhere. But that advantage shrinks every time another company decides the costs outweigh the benefits.
Davis acknowledged Silicon Valley's pull as a magnet for talent and investment. He did not argue that Texas can match it overnight. But he made clear that for a mid-size apparel company trying to grow a collegiate sports business, the calculation was not even close. Round Rock gave him the space, the location, and the regulatory environment he needed, at a price California could not match.
The open questions around California's proposed billionaire tax remain significant. It is unclear whether the measure has advanced through any committee or exists only as a proposal. The specific IRS data year was not identified. And no one has put a number on how many Digital Brands Group employees will make the move versus how many will stay behind in California.
What is clear is the direction of the trend. Nearly $1.9 billion in income left Los Angeles County alone. Tens of thousands of tax filers across five Southern California counties chose to leave. And Sacramento's response is to float a new tax on the wealthiest residents, the very people with the most resources and the least friction when it comes to relocating.
California's leaders can debate whether the exodus is a crisis or a manageable adjustment. The people and businesses actually leaving have already made their decision, and they are not waiting around for Sacramento to figure it out.
