SpaceX is preparing for the largest IPO in history. Elon Musk moved to Texas a few years ago and relocated the headquarters of SpaceX and Tesla there to avoid California taxes. But thousands of employees remained in the state, so California will still receive billions.
Factory in California
SpaceX’s rocket factory is currently located in Hawthorne, California. Rockets and satellites are designed and manufactured there. According to the city’s financial report, SpaceX has 7,661 employees and is the city’s largest employer.
The company has a total of about 23,000 employees, meaning roughly one-third of its workforce is based in Hawthorne. And of the 154 startups founded by former SpaceX employees, 94 are also located in California.
Musk left, but the taxes remained
Musk moved to Texas in late 2020, and in 2024, the headquarters of both companies relocated there as well. Texas does not levy income tax on individuals or corporations, so the move made obvious financial sense.
Nevertheless, following the IPO, the shares held by employees who remain in California will become liquid, and the sale of these shares will generate capital gains. The state taxes such income as ordinary income at a rate of up to 13.3%.
California is already counting billions
Chris Hoene, director of the California Budget and Policy Institute, said that proceeds from SpaceX’s IPO could help offset cuts to government programs. He noted that wealthy residents of the state paid more taxes than others, but also held the lion’s share of the state’s wealth.
California Governor Gavin Newsom has already factored this into the budget. His revised proposal calls for $15.7 billion more in revenue due to increased capital gains.
By comparison, ahead of Facebook’s 2012 IPO, state analysts estimated that future revenue from stock transactions would total approximately $2 billion over two fiscal years. SpaceX’s scale is significantly larger, although no one has provided precise forecasts yet.
According to morningstar.com
