Toyota bails out of high tax states, moving headquarters to Texas
Toyota announced today that it will be moving its corporate headquarters, manufacturing headquarters, sales and marketing, and financial services into the zero corporate tax, zero personal income tax State of Texas. These operations are departing some of the highest taxed areas in America. About 4,000 employees will be affected by the move.
The new operations center will be a huge campus in Plano, a suburb of Dallas, Texas. The move is expected to take place over the coming three years. Half of the move, and about 2,000 of the positions affected, will be the move of Toyota Motor Sales (TMS) North America’s HQ from Torrance California. California’s corporate tax is 8.84%. Its personal Income tax is $13.3%. Another 1,000 positions will depart from Kentucky, which has a personal and corporate tax of about 6%. The rest will move from New York, which has a state personal income tax of 8.82% and a corporate tax of 7.1%, not including taxes levied by the city of New York. As stated earlier in the article, Texas has no personal or corporate tax.
Toyota says the move is “designed to better serve customers and position Toyota for sustainable, long-term growth.” Toyota is not the only automaker looking to expand outside of the Golden State and other high-tax areas. Tesla Motors, who has most of its manufacturing in an abandoned Toyota and GM facility in Freemont California, recently announced plans to build a huge new Gigafactory to make battery packs. Texas was one of the finalist states announced. California was not on the list. Similarly, Hertz recently abandoned New Jersey and moved its operations and 1,000 jobs the to the low-tax state of Florida.
In its announcement Toyota did not mention the tax issue. This is a smart approach. When LeBron James bailed on his home state of Ohio and moved his services to the tax-free state of Florida there was quite an uproar. The people left behind don’t like to be reminded why this national trend is occurring. In order to assuage the feelings of the communities being abandoned, Toyota announced a $10 million fund to continue to support local charities and foundations.
Texas is the current location of Toyota’s Tundra pickup manufacturing, and most of its Tacoma manufacturing, among other operations. Toyota also included in its press release information about its expansion of engineering and similar operations in Michigan, a state that all automakers must maintain a presence in, regardless of cost.
Tesla Gigafactory could be built in Texas