Toyota's move out of California continues to make sense.
John Goreham's picture

Toyota's Exodus From California Looks Smarter Every Day

Toyota moved its HQ as well as other operations out of California. Reminders of why just keep coming.

After six decades in the U.S., Toyota North America announced it would move its headquarters out of California in 2014 and recently completed the move. Thousands of high-wage, stable jobs now reside in the greater Plano area of Texas rather than in the state of California. The workers, along with Toyota, pay significantly less in taxes as a result of the move.

However, that wasn't Toyota's first step toward the door in California. In 2010, Toyota closed its Freemont manufacturing plant, known then as the NUMMI plant (for New United Motor Manufacturing Inc.). It was the last remaining automobile manufacturing plant in California at the time. The California plant that had manufactured midsize trucks and compact cars for Toyota was not "economically viable." However, the Texas plant that is one of the locations that makes those trucks has seen huge investments and workforce expansions. Toyota is also building new capacity for its compact cars in Alabama. The two main reasons Toyota bailed out of manufacturing in California were the fact the plant was unionized and the cost of doing business in California due to government regulations and state taxes was simply not close to what Toyota could get in other states.

Toyota sold its plant to Tesla, who in part paid in stock that Toyota made a half-billion dollars on after it was sold in June of 2017. Not only did Toyota figure out a way to flee California and stop the bleeding, it found a way to rid itself of an old plant and make a significant amount of money from the sale.

Toyota's latest reminder of why it left California comes courtesy of two assemblymen of California. Assemblymen Kevin McCarty, D-Sacramento, and Phil Ting, D-San Francisco have proposed amending California's constitution to impose an income tax surcharge on corporations who have a volume of business exceeding $1 million in the state. The proposal would boost California's corporate tax from 8.84% to just under 15%.

Business leaders say the move would push more companies out of California to states like Texas that have no corporate income tax. Companies don't have to move far to escape California's high taxes. Nevada has no corporate income tax. Just ask Tesla, who opted not to build their newest factory in California, and instead built in Nevada. Some companies learn faster than others.

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We left a high tax state (Illinois) years ago and were happy to do so. Took a large pay cut and it was worth every penny. Wouldn’t go back if you tripled my salary. The mass exodus will continue in these states. Business and people alike.
Texas does have a corporate income tax, but it's very low.
Sounds like an excellent decision. Every dollar extra they pay in tax goes onto the price of the cars we buy, so I support them fully. I don't work hard to make additional money to pay lazy greedy governments in taxes!
We'll am not planning to buy Toyota cars anymore! I've been extremely satisfied with GM's plug-in cars. They perform much better than those of Toyota's. Am getting 1,000+MPG or 122 MPGe with my Volt and only used 30 gallons of gas for 41,000+ miles.
That is fantastic mileage Rhodomel! Imagine how much more you would have saved if you had opted for the more fuel efficient and more energy efficient Toyota Prius Prime. Thanks for checking in.