California CEO Says Business Climate Sucks as Company Bolts for Texas [WATCH]

“Doing business in the state of California sucks,” Hil Davis, chief executive of Digital Brands Group, told Fox News Digital.

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His blunt assessment came after years of rising costs, regulatory headaches, employee commuting problems and expensive legal battles in the Golden State.

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That frustration eventually pushed Davis and his apparel and electronic commerce company more than 1,300 miles east to Texas.

Digital Brands Group relocated its headquarters from Southern California to Round Rock, a growing business community located just north of Austin.

The company leased approximately 70,000 square feet of warehouse and office space for its expanding collegiate sports apparel operation.

Davis said the sprawling Texas property costs roughly the same as the former company location in Vernon, California, about five miles south of Los Angeles.

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That comparison tells the story California politicians would rather avoid.

A business can secure far more space in Texas, improve its shipping position and operate near Austin’s growing creative workforce without paying a larger real estate bill.

Davis said California’s punishing cost of living also forced employees to endure long commutes, while the company faced mounting operating expenses and the persistent cost of defending against lawsuits.

Every new burden made remaining in the state harder to justify.

“You start to add all those things up,” he said.

“It doesn’t work. It doesn’t make sense. It’s too hard.”

For business owners accustomed to California’s endless maze of expenses and regulations, that conclusion is becoming increasingly familiar.

The move comes as California faces an accelerating debate over whether its taxes, regulations and cost structure are driving away residents, companies and wealthy taxpayers.

Texas business advocates say high tax states such as California and New York are steadily sending jobs, investment and personal wealth toward Texas.

California lawmakers are also considering a proposed one time tax of as much as 5% on residents worth more than $1 billion.

Supporters claim the billionaire tax could generate billions for health care and public programs, apparently assuming wealthy taxpayers will simply sit still while Sacramento reaches deeper into their pockets.

Opponents warn the proposal could chase major taxpayers out of California and eliminate future revenue along with them.

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The latest Internal Revenue Service data show Los Angeles County leading the nation in taxpayer losses.

The county recorded a net departure of 17,496 tax filers to other states, and those departing residents took nearly $1.9 billion in income with them.

The damage extended well beyond Los Angeles County.

Orange County lost a net 11,618 filers, while San Diego County lost 9,401, Riverside County lost 8,968 and San Bernardino County lost another 8,462.

Those numbers carry serious consequences for state and local budgets because departing taxpayers take taxable income with them.

That shrinks the revenue base used for schools, infrastructure and public safety, leaving remaining residents to shoulder more of the burden created by Sacramento’s spending ambitions.

Davis does not expect every company or affluent resident to flee California at once. “I don’t know if there’ll be, like, an explosion,” he said.

“I just think it’ll be a constant leak.”

California retains major economic advantages, including Silicon Valley’s technology network and Los Angeles County’s large pool of creative professionals.

Davis acknowledged that those industry “centers of gravity” cannot easily be recreated elsewhere, and Digital Brands Group will continue operating some production functions in Los Angeles.

Round Rock nevertheless offered a better business equation, including lower costs, a central shipping location and access to Austin’s workforce.

Davis also said the permitting process for the new Texas facility moved quickly, a refreshing concept for businesses accustomed to California bureaucracy.

Some Digital Brands Group employees are eager to move to Texas, while others with deep California roots may remain behind.

The company has already cast its vote, and California’s political class now gets to watch another headquarters, more jobs and future investment head for friendlier territory.

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