The law (at least in California as described in the article) did not permit this behavior. If you didn't actually do the majority of your business in another state then you were illegally evading taxes.

The problem is that this was hard to enforce, so now they have changed the law to something much simpler: if any corporate officer or beneficial owner is a resident of California, then the business is subject to Californian taxation.

The law does not permit the behavior. Tennessee explicitly requires local registration and taxes due on any vehicle owned by a citizen of the state that has spent more than, IIRC, 2 days within the state. They have no income tax so these property taxes are the state's main funding method and they have been increasingly thorough on enforcing it. It is considered willful and intentional tax evasion.