Mass layoffs, corporate and startup exodus, and the stunt of technological innovation in Silicon Valley have been leading to its sharp decline in recent years. At the start of the century, Silicon Valley was a location coveted for its high employability, technological opportunities, and the opportunity for high individual wealth. With the dramatic increase in the cost of living, mass layoffs, and the nearly impossible task of getting hired, Silicon Valley is dying a slow death, which is suffered by those who once lived and breathed its success. A major cause of all of this? Its government’s hefty taxes.
In a world where cost-efficency is of the utmost importance, Silicon Valley fails to provide even the most basic criteria to foster a successful business. The high cost of living and taxes make California unwelcoming to most businesses. The California government and changes to the workforce simply aren’t sustainable for fostering an entrepreneurial environment.
This has been evident for over a decade. Initially showing faults in skyrocketing real estate prices and bloated workforces, it has been marked in recent years by billion-dollar corporations laying off thousands of employees or leaving California altogether.
Google, Oracle, Meta, and Salesforce have all slashed their workforces, citing something along the lines of “efficiency” and “cost-cutting.” In an environment where even billion-dollar companies feel financial pressure, it is impossible to sustain the entrepreneurial market that Silicon Valley once nurtured.
Meanwhile, high-profile corporate moves like Tesla to Texas and Oracle to Tennessee signal more than relocation; they are declarations of independence from what Silicon Valley has become: expensive, restrictive, and unsustainable.
These tax-friendly business havens allow for massive financial relief not offered by California. Sky-high tax rates in California are driving business and technology, a massive economic input for California’s gross regional product (GRP), away. California’s government is simply not doing enough to encourage business or entrepreneurship headquarters to remain in California.
In 2020, 3140 companies left California. Between 2009 and 2023, more than 30 of those have been companies with $1 billion or higher exit values, and over 20 have had between $500 million and $1 billion exit values. Companies across the board are fleeing California. Unstoppable and jaw-droppingly rich companies, as well as small and struggling startups, are leaving California alike.
While a major pull factor for headquarters in places like Tennessee and Texas is the all-around low costs, California is practically shoving technology away with its high tax impositions. The state is simply not doing enough for one of its biggest sources of revenue.
Tax laws like those created by Gov. Gavin Newsom do not favor corporations. Instead, these laws impose a heavy state tax on them. Employees are more expensive to source, as their high cost of living forces each company to pay a costly amount. The skilled and intellectual labor for Silicon Valley usually requires a post-secondary education degree, and therefore, employees’ expectations are to have a higher income.
For instance, the average annual salary at a company like Google is around $133,000. In contrast, skilled labor elsewhere in the country is around $54,000. These employees expect to make a lot of money proportionally when compared with their less intellectually skilled counterparts, which forces companies like Google or Apple to pay these individuals large sums of money in places like California.
While some argue that Silicon Valley’s exodus is not a reflection of the decline of the tech industry, Silicon Valley has lost its monopoly on innovation as well. Startups are emerging and thriving worldwide in places like Miami, Atlanta, Salt Lake City, and Berlin. Venture capital is increasingly flowing into these new hubs, unburdened by California’s cost structure. Technological innovations are no longer bound to Silicon Valley.
Again, California’s government makes no effort to force a stay. No initiative to keep companies in California has been announced or enacted. It is as if the California government does not care enough to keep its economy as successful as it is.
While some argue that high taxes on corporations are necessary, there is a fine balance. If the taxes are too high, businesses will not want to settle in California. There can still be a reasonable tax on corporations while balancing and fostering entrepreneurship.
The perks of prestige and proximity for living in Silicon Valley are no longer reasonable, either. In a post-pandemic world where remote work is viable, perhaps even preferable, why pay more for less in California when one can work the same job online and pay much less to live?
In somewhere like Austin, where a one-bedroom apartment costs an average of $1433 per month, or Boise, where a one-bedroom apartment costs an average of $1464 per month, is it really more practical to live in Palo Alto, where that same apartment averages $2895? In Belmont and Redwood City, the rent is staggering in comparison to the aforementioned cities, with an average one-bedroom apartment cost of $2758 and $2924, respectively.
More importantly, the cultural dominance of Silicon Valley has eroded. The industry that once celebrated “move fast and break things” is now known for mass layoffs. The ethos of innovation in Silicon Valley that once helped to develop the Internet and email, and that innovated the integrated circuit and the microcomputer, has been replaced with risk-aversion and revenue optimization.
There is no incentive for anyone, any business, or corporation to stay. At the state level, they are practically being driven out. In the changing mode of working, which now places a heavy emphasis on remote and online communication, there is no incentive to stay in California for the price.
Instead of racing towards innovations and new technological developments, many companies are now focused on trimming headcount and maximizing corporate earnings. In 2025 alone, over 60,000 tech workers have been laid off across nearly 140 companies. This is not a new pattern, as mass layoffs have been occurring since the start of the decade.
The solution to Silicon Valley’s decline? Enforcing lower tax rates that benefit both the state and corporations for workers and their companies. More workers will be incentivized to live in California, and corporations will be more inclined to build their companies in Silicon Valley. Further, corporations that remain in California, placing an emphasis on working in person, would help to repopulate and therefore bring more economic funding into Silicon Valley.
None of this means that California will collapse or that tech is dead. But the idea that Silicon Valley is still the beating heart of the tech world? That myth is over. The valley that once drew the best and brightest is now driving them away because of unreasonable tax impositions and massive alterations in the workforce.
