I have always thought that there is a reason (or can be, depending). When the capital city is also the largest city, the rest of the state can often be ignored (a complaint from many about Boston, for example). If the capital is outside of the major cities then the government can better focus on the state as a whole without getting involved in local politics (think Albany vs New York City).

Also, often capitals are moved outside of major cities due to population and infrastructure, as sometimes larger cities can't sustain any more growth (which is what happened to Malaysia).

San Francisco has interestingly never been a contender for the capital, as before Sacramento it was Monterey (and Benicia and Vallejo but those were just stints). And if it were, the odds of the State focusing on the Bay Area before anywhere else could indeed become an issue.

If there's a significant economic, cultural, and political divergence between a city and the rest of its state, there's also a strong argument to separate the cities off as autonomous city-states.

If people in upstate NY and NYC have conflicting interests, wouldn't it be better for both parties to separate NYC as as state in its own right, rather than maintain the compromise solution of Albany?

"Google is incorporated in Delaware. Apple (through Braeburn Capital since the mid-2000s) manages most of its assets in Nevada. They're not paying state corporate income taxes to anyone, let alone California. "

I don't think this is entirely correct as it's a misconception about what it means to incorporate in Delaware. Foreign companies operating in California (and other states) pay taxes there.

There are ways to use Delaware and Nevada to pay less in state taxes, but simply being incorporated there is not one of them, and they are still definitely paying state taxes to Georgia.

Apple was, and is, incorporated in California. Perhaps you're thinking of Braeburn Capital, their cash-management subsidiary which they (relatively recently) created in Nevada.

Good point. Updated.