Hil Davis does not mince words. “Doing business in the state of California sucks,” he said, with the kind of bluntness that comes from years of accumulated frustration. Davis is the chief executive of Digital Brands Group, an apparel and e-commerce company that makes collegiate sports apparel, and he recently made a decision that many business leaders have quietly considered but been reluctant to act on. He moved his headquarters out of California, leaving the company’s longtime space in Vernon, just five miles south of Los Angeles, and relocating more than 1,300 miles away to Round Rock, Texas, a fast-growing suburb north of Austin. The new facility spans roughly 70,000 square feet of warehouse and office space, and it cost about the same as the old one in California. But as Davis tells it, the rent was never the real problem. The real problem was everything else: the exorbitant cost of living, the exhausting daily commutes, the constant threat of lawsuits, the weight of regulations, and the creeping sense that the state was no longer a partner in his success, but an obstacle to it. “You start to add all those things up,” he said. “It doesn’t work. It doesn’t make sense. It’s too hard.” Those words carry the weight of a man who did not leave on a whim, but rather reached a point where staying felt more expensive than leaving, not just financially but emotionally and mentally.
To understand Davis’s decision, you have to imagine the texture of an ordinary workday in California before the move. Employees drove past smog as they headed toward the warehouse in Vernon, some commuting two hours from Riverside or San Bernardino because that was the only way to find affordable housing. They were tired before the day even began. The cost of living in California is not an abstract economic statistic; it is a parent missing a child’s soccer game because of the drive, it is a team leader worrying about whether a modest salary can cover rent, it is the quiet dread of a lawsuit arriving in the mail and knowing that even a baseless claim will require time, lawyers and money to fight. For Davis, those pressures stacked up year after year. It was not just the state tax rate or the minimum wage or the parking lot; it was all of it, woven together into a daily rhythm that made entrepreneurship feel like a losing battle. Texas offered a different relationship. Round Rock gave him the same square footage for the same rent, but with lower operational costs and a central location for shipping products to universities across the country. The permitting process moved quickly. Local officials seemed glad to have his business. He had access to Austin’s creative workforce, which is nothing to dismiss. But just as important, he felt a sense of welcome. In California, he felt like someone to be regulated. In Texas, he felt like someone to be helped. That difference is hard to quantify, but for a business leader it can be everything.
Davis’s story arrives at a moment when California is wrestling with deep questions about its future. The state is famous for its innovation, its beauty and its cultural influence, yet it is also struggling with a budget deficit, a housing crisis and growing concerns that taxes and regulations are chasing away the very people who help fund the public services its residents depend on. That fear has turned into a heated debate over a proposed one-time tax of up to 5 percent on Californians worth more than $1 billion. Supporters of the so-called billionaire tax argue that the state’s wealthiest residents have benefited enormously from California’s roads, universities, courts and infrastructure, and that asking them to pay more in a time of need is not radical but reasonable. The revenue, they say, could flow into health care, schools, affordable housing and other programs that have been chronically underfunded. Opponents see a different future. They warn that a special tax aimed at the wealthy would send billionaires and their capital running to places like Texas, Florida and Nevada, taking not only their current tax payments but also the future income, jobs and investment that might have stayed behind. For Davis, the debate over the billionaire tax is just another symptom of a broader mindset that treats successful people as assets to be harvested rather than partners in building the state’s economy. He is not a billionaire, but he identifies with the pressure that wealth and success face in California. The conversation about the tax is not merely academic; it is personal for every entrepreneur who wonders whether the state wants them to stay.
The latest IRS data suggest Davis is not alone in feeling that way. Los Angeles County led the entire country in taxpayer losses, with a net 17,496 tax filers leaving for other states and taking nearly $1.9 billion in income with them. Orange County recorded a net loss of 11,618 filers. San Diego County lost 9,401, Riverside County lost 8,968, and San Bernardino County lost 8,462. These are not just numbers on a spreadsheet. Every one of those filers represents a household making a heartbreaking decision. There are families saying goodbye to neighbors they have known for decades. There are business owners closing the doors of shops that have been part of their local community for a generation. There are grandparents moving across the country to live with children who can no longer afford to raise families in the state where they were born. When these people leave, they take their income, their purchasing power, their charitable giving and their tax dollars with them. The consequences show up in the places they leave behind: school districts that lose funding, public transit systems that cannot afford repairs, hospitals that struggle to keep their doors open. Davis does not believe there will be a sudden, dramatic exodus that makes headlines. He predicts something slower and perhaps more dangerous: a constant leak. “I don’t know if there’ll be, like, an explosion,” he said. “I just think it’ll be a constant leak.” A slow leak is easy to ignore, but over time it empties a tank that once felt full.
And yet, California is far from abandoned. It still holds powerful centers of gravity that are difficult to replicate anywhere else. Silicon Valley remains a magnet for technology talent, venture capital and the dream of building the next great company. Los Angeles has a deep bench of creative workers in film, music, fashion and design, and it continues to draw people who want to make art for a living. Davis himself acknowledged that these clusters of talent and capital are almost impossible to move entirely, which is why Digital Brands Group is keeping some of its production operations in Los Angeles even after moving its headquarters to Texas. The company now has a foot in both worlds: manufacturing ties to California, and a growing logistical base in the heart of the American South. The employees of Digital Brands Group are facing their own private battles over what this move means. Some are eager to follow the company to Texas, excited by the promise of larger homes, shorter commutes and a lower cost of living. Others are staying behind because their roots in California run deep. They have aging parents who need care, children in schools they love, and friendships that have lasted lifetimes. Davis understands both responses. He does not judge the employees who choose to remain even as he made the opposite choice for his company. In a way, the human story is more complicated than any policy debate. It is about love of place, fear of change, practical necessity and dreams for the future, all tangled together.
In the end, Davis’s move to Round Rock is a small piece of a much larger story about the redrawing of America’s economic map. For decades, California was widely seen as the place where dreams come true, a golden destination where ambition could be rewarded and reinvention was always possible. It still holds that power for many people. But as the cost of doing business rises and as states like Texas court companies with open arms, the assumptions that once guided entrepreneurs are shifting. Davis’s decision was not an act of hatred for his former home. He still has employees there, and he expresses genuine respect for the creative energy of Los Angeles and the technology community of Silicon Valley. But he has also reached the point where the barriers outweighed the benefits. He wants his company to survive and grow, and he believes that can no longer happen in California. “I don’t know if there’ll be, like, an explosion,” he said. “I just think it’ll be a constant leak.” Those words are worth pausing over, because a constant leak is not dramatic. It does not lead the evening news. It is a quiet, ongoing shift that happens one company at a time, one family at a time, one taxpayer at a time. And yet, over the years, it can change the character of a state more profoundly than any single event. Davis has already made his choice. The warehouse in Texas is filled with boxes, products and the beginning of a new chapter. As California debates how to tax its wealthiest residents and how to keep its promises of opportunity, the real story is still unfolding, in the lives of people who decide where to put their energy, their talent and their hope.
