Large players typically already run substantial offices in other cities, and have more to gain from lower tax rates and less regulation. said this month that it would also make the move. have left San Francisco for Texas, and Hewlett Packard Enterprise Co. California has the highest top marginal income tax rate for individuals in the country, at 13.3%, which some lawmakers tried unsuccessfully to raise still higher this year.Ĭounterintuitively, some of the Bay Area’s biggest businesses may be more likely to relocate than their nimbler startup counterparts. Taxes may provide some VCs with a new, urgent reason to leave California, particularly if they’re due for big potential gains from a record year of initial public offerings, including the stock market listings of Airbnb and DoorDash. Many investors fleeing Silicon Valley are moving to states that don’t tax personal income, including Florida, Texas and Washington. In an opinion piece in The Wall Street Journal titled “California, Love It and Leave It,” he also criticized the state’s “intolerant far left.” In a similar conversation with Fortune, Rabois called San Francisco “massively improperly run.” And he brought up another factor that often goes unmentioned in such articles: California’s high state income tax. Lonsdale cited San Francisco’s checkered record on public safety, the area’s strained electricity grid and municipal government dysfunction among the reasons for his move. Venture capitalist Joe Lonsdale, another investor in Thiel’s circle, said earlier this year he was moving his firm, 8VC, to Austin from San Francisco. Opponents objected to what they saw as political meddling in business. One example: a measure signed into law in September aimed at increasing minority representation on boards. The region also faces high rents and intense competition for hiring, along with what some regard as overreaching state regulation. Many VCs complain that given its large city budget, $13.6 billion for the 2020 to 2021 fiscal year, San Francisco seems unable to effectively solve problems such as homelessness. ![]() The news of more tech industry departures comes as the Bay Area grapples with unpleasant realities. And partner Scott Nolan splits his time between Los Angeles and San Francisco. In addition to Thiel, a vocal San Francisco critic who has lived in Los Angeles for years, partner Keith Rabois recently said he would move to Miami. (Andrei Gabriel Stanescu/Dreamstime/TNS)īut even though the firm isn’t going anywhere, several individual partners at Founder Fund have moved out of town. Though some tech firms are leaving the state, venture capitalists may be bound to the Bay Area by the nature of startup culture. The Google Maps icon is seen in June 2019 on the Google campus in California's Silicon Valley.
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