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Toyota bails out of high tax states, moving headquarters to Texas

Toyota is moving its headquarters operations from the high tax states of California, Kentucky, and New York to the tax-free State of 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.

Related Story:
Tesla Gigafactory could be built in Texas


Gh5 (not verified)    April 29, 2014 - 6:45PM

Actually, Toyota will maintain 2,300 employees in California, including its oldest manufacturing facility in the US, TABC (which supplies parts to the factories in Texas and other US locations, as well as Japan).

Also one correction: California is indeed (back) in the running for the gigafactory as state and local officials have been in discussions with Tesla for several weeks now. A possible location is in Imperial County by the Salton Sea, which is not only a natural source of lithium and the location of a first-of-it's kind factory that will extract lithium from geothermal energy (brine), but also an area that is a major center of geothermal, solar and wind power, has ample and cheap land, access to rail, is within close proximity to Tesla's manufacturing in Fremont and of course had access to skilled labor from the most technologically advanced state. You can also be sure there will be the same lucrative benefits and great green regulatory environment that helped spawn Tesla to begin with and allow it to flourish.

John Goreham    April 30, 2014 - 10:40AM

In reply to by Gh5 (not verified)

Hmm. Your information about the gigafactory is at odds with a quotation by Elon Musk in Bloomberg today. maybe it is all just a ruse. - - Begin quote: California didn’t make Tesla’s list of potential sites for the battery plant because of the amount of time needed to win environmental and regulatory approval, Musk said.

“California has a lot of regulatory agencies, and although this will be a very green factory, we can’t have a situation where an enormous amount of data has to be processed by a regulatory agency to find no significant impact and then give us approval to proceed,” he said.

Musk had told reporters in China last week that the company was considering two locations, the Associated Press reported.

Here is the link:

Toby (not verified)    April 30, 2014 - 5:55AM

Ok..... but the point of the story is Toyota is moving to a state with LESS TAXES. If the government doesn't change its ways and soon, plan on seeing a lot more of stories just like this.

John Goreham    May 15, 2014 - 12:09PM

A Tesla Club member TN communicated with this week offered this observation. We offer it as a comment, not researched news, so please view it as such:::::Teresa from Texas writes
"Plano, Texas near where I am just made Toyota a deal that is the biggest incentive Texas has ever offered a business. As the company meets the deadlines, it will be eligible to receive portions of the $6.75 million economic development grant and portions of the grant will be based on jobs added, and property taxes, etc up through 2017 and additional incentives through 2027. The money will be paid out of Plano’s $30 million Economic Development Incentive Fund.
Toyota will be eligible to receive $2.9 million if it completes the 1 million-square-foot building and creates or transfers at least 2,900 full-time jobs by Dec. 31, 2017." Thanks Teresa!