An apparel company CEO packed up his California headquarters and moved more than 1,300 miles to Texas, bluntly declaring that operating in the Golden State no longer makes financial sense, a decision that mirrors a broader taxpayer exodus the IRS has already documented.
Hil Davis, who runs Digital Brands Group, relocated the company from Vernon, California, a small industrial city roughly five miles south of Los Angeles, to Round Rock, Texas, just north of Austin. The company leased about 70,000 square feet of warehouse and office space in its new home, and Davis told Fox News Digital the cost is roughly the same as what the company paid in California.
Same square footage, same price tag, but a fundamentally different operating environment. That, Davis said, is the entire point.
Davis did not hold back about why he left. He pointed to California's high cost of living, long employee commutes, and what he described as a rising cost of doing business that includes defending against lawsuits. He summed it up in a single sentence:
"Doing business in the state of California sucks."
He elaborated on the cumulative burden:
"You start to add all those things up. It doesn't work. It doesn't make sense. It's too hard."
Digital Brands Group, an apparel and e-commerce company, is expanding its collegiate sports apparel business, a line of work that benefits from a central shipping location. Round Rock sits near the geographic middle of the country, and Austin's creative workforce gives Davis access to the kind of talent pool he needs without the overhead California demands.
Davis acknowledged that California still has anchors that keep certain industries rooted there. Silicon Valley remains a magnet for technology talent and capital, and Los Angeles has a deep bench of creative workers. Digital Brands Group plans to keep some production operations in Los Angeles for that reason. Some employees may stay behind in California, though Davis noted others are eager to follow the company to Texas.
Davis's move is not an isolated decision. The latest IRS taxpayer migration data paints a stark picture of outbound flight from Southern California. Los Angeles County led the entire nation in taxpayer losses, recording a net loss of 17,496 tax filers who left for other states, and they took nearly $1.9 billion in income with them.
Four neighboring counties followed the same pattern. 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 tens of thousands of households that decided California was no longer worth the cost.
The rhetoric from some corners of progressive politics, including claims that billionaires "cheated" their way to wealth, helps explain the ideological climate driving proposals like California's billionaire tax. When lawmakers treat wealth creation as something to punish rather than encourage, the people who create it leave.
Davis predicted the exodus will continue, though not as a dramatic rupture. He described it as something more gradual and harder to reverse:
"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 relocation is a proposed one-time tax of up to 5% on Californians worth more than $1 billion. Supporters say the levy could raise billions for health care and other public programs. Opponents warn it would chase major taxpayers out of the state and take future tax revenue with them, the very dynamic the IRS data already shows in progress.
Even Democratic Gov. Gavin Newsom has come out against the measure, warning it could drive wealthy residents and investment out of California. When a Democratic governor publicly opposes a tax-the-rich proposal from his own political coalition, the policy's practical risks are hard to dismiss.
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 Lone Star State has no personal income tax, a regulatory environment that moves faster, Davis noted his permitting in Round Rock went quickly, and a cost structure that lets companies do more with the same dollar.
California's governance problems extend well beyond tax policy. A federal lawsuit recently alleged that 873,000 inactive voter registrations still linger on California's rolls, raising questions about basic administrative competence in a state that already struggles to retain the residents and businesses it has.
The fundamental math is not complicated. When a state raises costs on businesses and high earners, some of them leave. When they leave, they take jobs, payroll, and future tax revenue with them. The remaining residents shoulder a larger share of the burden, which raises costs further, which drives more departures. The IRS numbers from Southern California suggest that cycle is already well underway.
Davis's company is not a Fortune 500 giant. Digital Brands Group is an apparel firm that leases warehouse space and designs collegiate sportswear. But that is precisely what makes the story telling. If California's business climate is too expensive and too hostile for a mid-sized e-commerce operation, not just for hedge-fund billionaires, the problem runs deeper than a single tax proposal.
Progressive politicians who treat other people's earnings as a public resource rarely account for the simplest variable in the equation: people can move. And increasingly, they do.
California can keep debating how much to tax the people who remain. Texas will keep welcoming the ones who leave.
