Elon Musk ditched California, but the state will get a much-needed win from SpaceX's IPO

California will likely reap significant tax revenue from SpaceX’s upcoming initial public offering (IPO), despite the company relocating its headquarters to Texas under Elon Musk’s leadership. SpaceX is preparing to raise up to $80 billion at a valuation of $2 trillion, according to reports from the Wall Street Journal and Bloomberg News. While Musk moved SpaceX and Tesla out of California due to policy disputes, the state retains strong ties to the company, including a major facility in Hawthorne and a large workforce. The IPO could generate substantial capital-gains tax revenue for California, as investors sell shares and realize profits. Chris Hoene, executive director of the California Budget and Policy Center, noted that such revenue has become pivotal for state budgets, particularly as wealth becomes more concentrated. Governor Gavin Newsom’s revised budget proposal already includes a $15.7 billion increase, partly driven by higher capital-gains revenue from the tech sector, including potential IPOs from SpaceX, OpenAI, and Anthropic. California’s tax system benefits from stock-based compensation and investment income, which could see a windfall from SpaceX’s IPO. However, officials have not yet estimated the exact financial impact, as the Legislative Analyst’s Office (LAO) has not finalized calculations. Despite this uncertainty, the state’s reliance on high-net-worth individuals for tax revenue remains a key factor in funding public programs. SpaceX still operates a major facility in Hawthorne, California, employing many workers who live in the state. Musk’s decision to leave California in 2020 was influenced by disputes over civil rights laws and COVID-era restrictions, as well as Texas’s lack of state income tax. The IPO’s proceeds, however, could still provide a financial boost to California’s budget, helping offset potential cuts to state programs.