Musk’s Texas investments complicate potential relocation

Musk himself acknowledged the benefits of Texas in a recent post on X, noting that SpaceX and Tesla have thrived due to the state’s business environment. He wrote on November 7th, “SpaceX and Tesla have prospered in Texas, because we were not constantly operating under an oppressive and extractive state government.”

Several large-scale projects are underway in Texas, including a Terafab chip plant, a joint venture between Tesla and SpaceX, slated to produce 1 million wafers per month and potentially costing an estimated $1 trillion. SpaceX is also pursuing a $24 billion project involving a gas-fired power plant and supercomputer at Starbase, pending a tax decision from the city commission.

Investors have reacted cautiously, with SpaceX shares declining by 12% over the past month, reaching approximately $143. Donald Harrison, a SpaceX board member, resigned shortly after the recent elections. Tesla’s stock has fallen 16% this year, though the decline was less pronounced in the past month.

Ives’ assessment is supported by tax considerations. Both Texas and Florida have no state income tax. Therefore, a move from Austin to Miami would not result in any tax savings for Musk, who is subject to taxes on his pay and stock compensation linked to Tesla’s 2025 CEO Performance Award.

Furthermore, Texas taxes business property based on its physical location, meaning relocating assets would not eliminate the tax burden and could damage valuable political relationships.

The principle applies to anyone considering relocation for tax purposes: savings are limited to the difference in income tax rates, and only apply to income that is actually moved. States can still tax non-residents on income derived from sources within their borders.

For example, a remote worker moving from a state with a 5% income tax to a state with no income tax would save $7,500 annually. However, selling a home and moving incurs significant costs, potentially requiring several years to break even.

The next key development to watch is the Starbase city commission’s decision regarding the power plant tax, which will signal the direction of Texas’s incoming leadership.