California businessman Hil Davis wasn’t shy in his criticism of the Golden State after he decided to move the headquarters of Digital Brands Group, an apparel and e-commerce company, to Round Rock, Texas.

“Doing business in the state of California sucks,” Davis told Fox News Digital.

Davis said the company is leasing about 70,000 square feet of warehouse and office space as it expands its collegiate sports apparel business.

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Davis pointed to California’s high cost of living, long employee commutes and the rising cost of doing business, including defending against lawsuits.

“You start to add all those things up,” he said. “It doesn’t work. It doesn’t make sense. It’s too hard.”

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The relocation comes as California wrestles with a much bigger question about whether the state’s costs, taxes and regulations are driving away the businesses and wealthy residents it relies on.

That debate has intensified around a proposed one-time tax of up to 5% on Californians worth more than $1 billion.

Supporters say the billionaire tax could raise billions for health care and other public programs by asking the state’s wealthiest residents to pay more. Opponents warn it could instead send major taxpayers packing — and take future tax revenue with them.

California is already seeing taxpayers and their income move elsewhere. Los Angeles County led the nation in taxpayer losses in the latest IRS data, with a net 17,496 tax filers leaving for other states and taking nearly $1.9 billion in income with them.

Davis told the outlet he expects a slow, steady exit of people from California.

“I don’t know if there’ll be, like, an explosion,” Davis said.

“I just think it’ll be a constant leak,” he added.

Orange County, San Diego County, Riverside County, and San Bernardino County all experienced a net loss of tax filers.

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California still has powerful anchors. Silicon Valley remains a magnet for technology talent and capital, while Los Angeles has a deep bench of creative workers. Davis acknowledged those industry “centers of gravity” are difficult to replicate elsewhere.

Digital Brands Group will keep some production operations in Los Angeles after moving its headquarters to Texas.

But Round Rock offered Davis a different equation with lower operating costs, a central shipping location for a company serving universities across the country and access to Austin’s creative workforce. He said permitting for the new facility also moved quickly.

Employees now have their own choice to make. Some are eager to follow the company to Texas, Davis said. Others have deep roots in California and may stay behind.

Digital Brands Group has already made its choice. And as California debates how to tax its wealthiest residents, Davis says the real story is still unfolding, one company at a time.

 

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