Texas is emerging as the nation’s leading economic engine and corporate America is following suit, with companies rethinking where they belong. In addition to attracting investment, creating jobs and boosting long-term growth, Texas saw a 10.1% increase in per capita economic output from 2021 to 2024.
With the state’s booming economy, the corporate exodus to Texas is no coincidence. Texas’ economy continues to outperform the national average and ranks No. 1 in job creation. In March alone, 26 new projects were announced in locations across Texas, expected to create more than $20.5 billion in capital investments and 1,241 new jobs.
Backed by its pro-growth policies that promote freedom for both businesses and consumers, Texas is opening a new frontier in its growth story: attracting statutory corporations and their headquarters.
Historically, a company’s decision to relocate was seen as a routine business decision. Delaware has been the corporate crown for a century and is home to at least 60% of the Fortune 500 companies. However, growing opposition to Delaware’s legal environment has fueled corporate interest in reincorporation, especially in pursuit of a more predictable legal framework for doing business: entry into Texas.
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An American and Texas flag stands in front of the Chevron Corp. on Sunday, March 8, 2020. Pasadena Refinery in Pasadena, Texas. (Sharon Steinmann/Bloomberg/Getty Images)
Over the past five years, many well-known companies, such as SpaceX, Tesla and Zion Oil & Gas, have decided to relocate from Delaware to Texas – where they already have significant assets and operations. Recently, ExxonMobil announced plans to move from New Jersey to Texas, where it is headquartered. In public statements to investors, these companies cite a shared motivation: a desire to unify legal jurisdiction and corporate assets in one place.
For companies like ExxonMobil, Texas makes sense – both logistically and operationally. State regulators have reformed state corporate laws, providing legal and regulatory certainty to shareholders and management. Texas has also invested in its judicial infrastructure and established a specialized Texas Business Court to hear commercial cases, giving businesses the assurance that complex disputes will be resolved by experienced judges.
Other companies have chosen to uproot their historic headquarters in favor of physical moves to Texas. Blue states, including California, New York, New Jersey and Illinois, are in the running for the biggest losers when it comes to retaining corporate headquarters, with Illinois in the past five years handing over companies like Citadel and PEAK6 Investments to Florida and Texas, respectively.
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From 2018 to 2023, California experienced a net loss of eight Fortune 500 companies, seven of which moved to Texas. In addition to Tesla, Chevron also recently announced its decision to move its headquarters from California, where it has based its operations for nearly 150 years, to Texas. According to Chevron, the state already owns the majority of Chevron’s employees, and the company “expects all corporate functions to migrate to Houston over the next five years.”
A head office move is more than a symbolic gesture. Moving infrastructure and facilities involves moving assets, employees and executives, and California has experienced a cumulative net loss in corporate offices and corporate headquarters jobs since 2011.
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New Jersey, New York and Illinois follow California, losing more businesses than they gain over a five-year period. From the first quarter of 2020 through the first quarter of 2023, both California and New York lost nearly $1 trillion in assets under management due to corporate relocations. Meanwhile, Sun Belt states like Florida and Texas are emerging as the business and financial centers of the future, driven largely by business-friendly regulations and lower costs of living.
Exxon’s redomiciliation proposal shows how investments in physical infrastructure in a state can lead to formal reincorporation in that same state. Exxon, once headquartered in New York City, moved its headquarters to Texas in 1989 and has spent decades consolidating its leadership, workforce and research activities there while expanding its upstream investments, including in the Permian Basin. And now it’s asking its shareholders to formally bless the company as a legally incorporated corporation in Texas.
Over the past five years, many well-known companies, such as SpaceX, Tesla and Zion Oil & Gas, have decided to relocate from Delaware to Texas – where they already have significant assets and operations.
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In our federalist system, it is the norm for companies to look for the optimal state to establish a headquarters, hire employees, establish a legal domicile and raise capital. States compete with each other for different pieces of the puzzle. But recent reforms in Texas show that it is possible for a state to position itself as the complete package.
Simply put, companies want to pick a winner. Texas’ economy is booming, providing a place for companies to locate, hire talent, build factories, raise capital and build long-term investments. The state reforms in the field of corporate law and investments in the judicial infrastructure have enabled the state to mobilize new waves of companies.
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