AUSTIN, Texas — Brian McMullen’s only plan on a Thursday afternoon in March was to watch as many college basketball games as possible. Parked inside his neighborhood bar and grill and eating brunch tacos, he followed one game on the restaurant’s TV screen while another streamed on his iPhone.
As the games played out, McMullen talked about his new life in Austin, Texas, where he had moved in October from San Francisco. Some of his biggest activities since then: reading the Harry Potter series for the first time and spending more than 100 hours completing “Dragon Quest,” a role-playing video game. He was also working out a lot, he said, and teaching himself a coding language to create his own games.
For his medium-term goals, McMullen said, he and his new wife had been planning to honeymoon in Japan for a month. But they decided to cut the trip short to fly to San Francisco to meet friends for the opening night of “Avengers: Endgame” in April, at one point discussing whether to rent out an entire showing. (They did not.)
“I’m currently taking time off for myself,” he said.
McMullen, 33, is part of an exclusive club: the semiretired tech Millennial who left California after getting rich. Like many in this group, he is a newly minted multimillionaire who became wealthy by working for high-profile San Francisco startups like Uber and Lyft, which have just gone public. Once their wealth was assured, these tech workers quit the companies and fled California, which has the nation’s highest state income tax, at more than 13 percent, to reside in lower-tax states like Texas and Florida, where there is no personal state income tax.
“There are a number of places people could go where there’s tax benefits,” said McMullen, who joined Uber in 2011 and is tallied in the company’s system as employee No. 16. “The timing is good in terms of relocating prior to IPO.”
J.T. Forbus, a tax manager at Bogdan & Frasco in San Francisco, said he has been fielding more questions from tech workers about how moving out of state could help sidestep high taxes, especially as their companies stampede toward the stock market. Many tech workers are compensated with stock, which is generally doled out over four years but can trigger a hefty tax bill when it “vests,” or is earned, and when it is sold.
“It seems to be a question that kind of pops up when an IPO is happening and someone has substantial shares and could have millions of dollars coming their way,” Forbus said.
The sheltering move is well known by the California Franchise Tax Board, the state agency responsible for tax collection. In its guide for Californians who are compensated with equity and plan to move out of state, it walked people through various potential tax scenarios using low-tax states like Texas, Florida and Nevada as examples.
To avoid paying California taxes when they eventually sell their shares, residents truly have to move out of state. California imposes an income tax on shares vested in the state, but does not tax stock that is sold after someone moves away.
The New York Times recently interviewed seven former Uber and Lyft employees who moved to lower-tax locales. Some declined to speak on the record, citing concerns that talking frankly about their finances would hurt their chances with future tech employers, or make them audit targets. (Uber and Lyft declined to comment.)
Many argued that their primary motivation for leaving was a disillusionment with tech-obsessed San Francisco, and that taxes were not their main concern. Still, none had chosen to move to a high-tax jurisdiction like New York or Massachusetts. In a recent study of California tax data, Stanford researchers found that high tax rates alone do not cause millionaires to leave the state, and that migration increases during stressful lifestyle changes.
Most of the people the Times spoke to were putting their new wealth to use, buying houses and planning vacations. Several had made vanity purchases, such as Teslas. One had acquired an artsy dance hall in Texas as a residence, which included a bathtub in the middle of a bedroom. Most were taking long sabbaticals from work and experimenting with new diets, exercise and meditation. A few had launched their own startups.
“It’s almost a new generation of Millennial retirement,” said Tyler Mann, 31, who worked at file-hosting service Dropbox and made several hundred thousand dollars from the company, which went public last year. He moved to Austin 18 months ago and has since founded a startup.
Many Millennial millionaires said they were relieved to be out of San Francisco, which has gotten increasingly expensive, crowded and filled with carbon-copy tech bros who drone on about their startups. They talked about how they were resetting their lives, how stressed they had been in tech and how they were getting over burnout. They talked about the tech parties they had attended and complained that the celebrations revolved around work.
“It got monotonous,” said Nathan Rodriguez, 30, one of Lyft’s first 50 employees, who last year traded San Francisco for Austin. “I got tired of the keeping-up-with-the-Joneses feeling you have in that kind of environment.”
Rodriguez left Lyft in 2017 after working there for four years, during which the company’s valuation shot up more than 38,200 percent. He then took 10 months off work and went on cross-country road trips. He said he made less than $1 million from Lyft and briefly became a cryptocurrency millionaire before the crypto market crashed in early 2018. He recently joined a startup in Austin because, he said, he liked the feeling of having a big impact at a small company, and because he has hefty medical bills to pay after a bike accident.
McMullen, a Northern California native, moved to San Francisco eight years ago from San Luis Obispo, when a then-tiny startup called Uber offered him a job in marketing. He had been working at an Apple Store. His co-workers warned him that startups often tank and urged him to stick with his stable job and benefits.
McMullen said he didn’t listen because he wanted to move to San Francisco. “There was a romantic notion of what San Francisco was,” he said.
Uber ballooned into a behemoth. Its public offering brought a valuation of about $70 billion, meaning that the company and the stock options it issued to early employees like McMullen would likely have increased in value by far more than 100,000 percent.
Along the way, McMullen cashed out some of his Uber shares when the company let employees sell their stock to private investors. After working at Uber for so long, he said, he was motivated to leave and go somewhere he could have a bigger impact.
“The idea of retirement as sitting on a sandy beach somewhere, I don’t think is on any Millennial’s mind,” he said. Instead, he added, his generation is focused on seeking fulfillment, searching for the kind of career that doesn’t feel like work. His goal was to “realign life,” he said.
