A California-based apparel and e-commerce company has relocated its headquarters to Texas, citing high costs and a difficult business environment in California. Digital Brands Group, led by CEO Hil Davis, moved its operations from Vernon, California, to Round Rock, Texas, leasing approximately 70,000 square feet of combined warehouse and office space.
The company’s decision follows a broader trend of businesses and residents leaving California, with Los Angeles County recording the highest net loss of tax filers in the latest IRS data. A net 17,496 tax filers departed the county in the most recent reporting period, taking nearly $1.9 billion in income with them.
Reasons for relocation
Davis cited several factors driving the move, including California’s high cost of living, long employee commutes, and rising operational costs. He specifically highlighted the financial burden of defending against lawsuits and the overall expense of conducting business in the state. The Texas facility, Davis noted, offers comparable costs to the company’s former California location despite the significant geographic shift.
Policy debate intensifies
The relocation occurs as California considers a proposed one-time tax of up to 5% on residents worth more than $1 billion. Proponents argue the tax could generate billions for healthcare and public programs by targeting the state’s wealthiest residents. Opponents, however, warn that such a measure could accelerate the departure of high-net-worth individuals and businesses, further straining state revenue.
Economic implications
The exodus of taxpayers and businesses has raised questions about California’s long-term economic stability. The state has seen significant outflows of income and residents in recent years, with Los Angeles and Orange Counties among the hardest hit. The trend has prompted discussions about whether regulatory and tax policies are inadvertently driving away the very entities that fund public services.
The company’s move to Texas reflects broader shifts in corporate location decisions, as businesses seek states with lower operational costs and more business-friendly environments.