Cummings & Cummings Law Reports 12-Fold Surge in California Business Departures Ahead of Proposition 40 Vote

Companies are relocating from California to Florida, Texas, Wyoming, and Tennessee as owners reassess tax exposure, regulatory uncertainty, and the long-term costs of maintaining a California business domicile.

DALLAS, Oct. 27, 2026 /PRNewswire/ -- Cummings & Cummings Law, a multistate law firm specializing in interstate business redomestication, reports a 12-fold increase in California-origin companies relocating to Florida, Texas, Wyoming, and Tennessee through its practice as California approaches its November 3 vote on Proposition 40, the proposed billionaire wealth tax.

The increase reflects the firm's own redomestication activity, rather than a statewide count of California business departures. It comes amid heightened scrutiny of California's tax policies and growing interest among business owners in aligning their companies' legal domiciles with their personal residences and operations.

Proposition 40 would impose a one-time 5% tax on the covered net worth of qualifying billionaires who were California residents on January 1, 2026. Business ownership interests would be included among the assets subject to valuation. The measure, which voters will consider on November 3, is not currently law.

Although the proposed tax would apply to a narrow group of wealthy taxpayers rather than businesses generally, Cummings & Cummings Law reports growing interest in relocation among owners of privately held businesses evaluating their long-term exposure to California's broader tax and regulatory environment.

"What we are observing is not simply a change in where business owners want to live," said Chad D. Cummings, an attorney and Certified Public Accountant with Cummings & Cummings Law. "Business owners are examining whether it makes economic or legal sense to maintain a company under California law when its management, ownership, and operations have moved elsewhere. Proposition 40 has brought additional attention to those questions, but the underlying financial considerations extend well beyond any single ballot initiative."

Unlike dissolving a business and forming a replacement, redomestication can permit an existing LLC or corporation to change its state of legal domicile while preserving business continuity, subject to the procedures authorized by the originating and destination jurisdictions and applicable federal tax requirements. Redomestication remains the gold standard for transferring a company to a new state.

That distinction matters for established businesses with existing contracts, financing arrangements, federal tax elections, and other relationships that could be disrupted by an improperly designed relocation.

The firm emphasizes that corporate redomestication and individual tax residency are separate legal questions. Changing a company's state of organization does not automatically eliminate California tax obligations arising from continuing business activity. Nor would a relocation undertaken after January 1, 2026, by itself, eliminate potential liability under Proposition 40's proposed residency rules.

The observed increase does not establish that Proposition 40 caused every departure. Business owners may also be responding to operating costs, family relocation, administrative obligations, and differences among state business-law regimes.

"Moving a company is not the same thing as changing its mailing address," Cummings added. "The transaction must satisfy the laws of two states and the applicable federal tax rules. The objective is to change the company's legal home without sacrificing the business relationships and tax attributes its owners have spent years establishing."

With the November 3 election approaching, the firm's reported increase provides a practice-level indication of how some California business owners are reassessing their long-term corporate domicile.

About Cummings & Cummings Law

Cummings & Cummings Law is a multistate law firm providing business, tax, and commercial legal services, including interstate redomestication of limited liability companies and corporations. The firm advises business owners on changing their companies' states of legal domicile while addressing federal tax continuity, corporate governance, and related commercial obligations.

For additional information, visit https://www.cummings.law/redomestication/.

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SOURCE Cummings & Cummings Law