Treasury Secretary Scott Bessent declared Friday that Texas has become America's "center of gravity" for business and families, citing the Lone Star State's business-friendly policies as a stark contrast to what he described as California's hostile tax and regulatory environment. Speaking at the Petroleum Club of Houston in remarks shared exclusively with Fox News Digital, Bessent pointed to an exodus of major corporations from California to Texas as evidence of a fundamental shift in American economic geography.
"In California, I saw firsthand what years of failed governance looks like: a tax system that is hostile to ambition. A regulatory state that smothers enterprise. An economic climate indifferent to consequence," Bessent said.
What the Left Is Saying
Progressive economists and Democratic officials push back on the narrative, arguing that California's high-tax model funds essential public services including education, infrastructure, and social programs that benefit working families. They note that California still leads the nation in total GDP at over $500 billion annually and remains home to Silicon Valley, Hollywood, and a diverse economy spanning technology, agriculture, tourism, and manufacturing.
California Governor Gavin Newsom's office has previously defended the state's approach, arguing that progressive taxation ensures wealthy individuals and corporations pay their fair share. State legislators have pointed to California's investments in climate policy, healthcare expansion, and education as long-term economic strengths rather than burdens.
Democratic economists argue that Texas's low-tax model comes with trade-offs, including fewer worker protections, limited access to reproductive healthcare, and less investment in public services. They note that California's population decline has been modest compared to overall demographic trends affecting the entire nation.
What the Right Is Saying
Republican officials and business groups echo Bessent's assessment, arguing that Texas's approach demonstrates the economic benefits of limited government intervention. They point to Texas Governor Greg Abbott's longstanding efforts to attract businesses through tax incentives, streamlined regulations, and energy-friendly policies.
"Texas has become America's center of gravity because it is fostering the conditions for families and businesses to flourish," Bessent said during his Houston remarks. He also highlighted energy policy as central to President Donald Trump's economic agenda: "The AI race may be accelerated by the elegance of our code, but it will be won by the abundance of our energy."
Conservative commentators argue that California's regulatory burden and high corporate taxes drive businesses to seek more hospitable environments. They note that Texas's lack of state income tax creates immediate savings for both individuals and corporations.
What the Numbers Show
According to a CBRE report tracking corporate relocations between 2018 and 2025, 725 companies moved their headquarters during that period. Of those, 230 relocated to Houston, Dallas, or Austin. Major firms including Chevron, Tesla, Charles Schwab, and Hewlett Packard Enterprise have shifted operations from California to Texas.
IRS migration data shows Texas gained a net 56,000 tax filers between 2022 and 2023, indicating an influx of higher-income residents leaving other states for the Lone Star State.
Energy production figures support Bessent's claims about Texas growth. The state has recently surpassed California in utility-scale solar capacity and reached record levels for both crude oil production and low-carbon electricity generation. Data centers supporting AI development have further driven demand for Texas energy infrastructure.
However, California's economy remains massive. The state's GDP exceeded $3 trillion in 2024, making it the world's fifth-largest economy if considered as an independent nation. California still leads the nation in technology sector employment, entertainment industry output, and agricultural production.
The Bottom Line
Bessent's declaration reflects a genuine shift in business migration patterns that both sides acknowledge is occurring. Texas has successfully attracted corporate relocations and high-income taxpayers through its regulatory and tax policies, while California continues to grapple with the fiscal implications of residents and businesses leaving.
The debate ultimately centers on competing visions for state governance: whether low-tax, limited-regulation models or higher-tax, more-services approaches better serve economic growth and quality of life. Both Texas and California face ongoing challenges—Texas must address infrastructure strain from rapid growth while maintaining energy policy flexibility, while California must balance its progressive revenue model against competitive pressures.
Watch for continued corporate migration data in coming quarters, IRS migration figures for 2024-2025, and any policy responses from California officials as the state seeks to retain businesses and taxpayers.