Our Founding Fathers envisioned each state as a laboratory where different legislative strategies could be tested and the best ones exported to other states. Unfortunately, political parties got in the way of that vision. What we are seeing instead is the migration of people and businesses to states where the business climate is better.
On Thursday, The Center Square reported:
ExxonMobil shareholders on Wednesday approved the board of directors’ plan to redomicile the company’s legal headquarters to Texas.
Shareholders also rejected a proposal made by two proxy advisory firms urging them to vote against the plan and add more automatic voting options to the company’s retail investor voting program.
In March, ExxonMobil Corp., based in Spring, Texas, announced its board unanimously recommended its shareholders approve changing its legal domicile from New Jersey to Texas, where its leadership and core operations have been based since 1989. The board hadn’t held a meeting in New Jersey for more than 40 years, and 30% of ExxonMobil’s global employees are located in Texas. Seventy-five percent of its U.S. employees live and work in Texas.
This makes sense on a number of levels. Aside from the fact that the majority of the employees live in Texas, Texas has a much friendlier business climate than New Jersey. The downside of this for the employees moving to Texas from New Jersey is that they will have to pay the New Jersey exit tax (which really needs to go to court to get struck down).
The article concludes:
New York officials have also long targeted ExxonMobil. In 2018, the state sued, alleging the company was committing fraud about “how climate change poses a risk to the company, the New York City Pension Funds, and the planet” because it refused to “give investors meaningful information about climate change risks and the company’s future.”
By contrast, in 2021, the Texas Legislature banned companies from implementing so-called ESG (environmental, social, governance) policies. In 2022, the Texas comptroller directed state agencies to divest from companies that were promoting ESG, including nearly 350 individual investment funds and 10 financial companies. Not soon after, companies began altering their policies to comply with Texas law.
In 2023, Texas and other states also sued the Biden administration, arguing its ESG policies were unlawful.
“The decision to redomicile in Texas is a decision to embrace a future of economic freedom, judicial predictability, and robust capital markets,” the coalition said. “Texas business leaders remain committed to defending the state’s right to compete and will continue to welcome any company seeking to escape the stagnation of politically charged business climates for the unparalleled opportunities found only in Texas.”
In the future, we can expect the financial center of America to move to states with fewer regulation and fewer taxes. The states that are losing businesses need to wake up quickly or lose their tax base.