In this case, one also assumes that Musk will continue to spend a fair bit of time in the state. Low-profile people can usually get off with just paying taxes in their home state even though they spend a lot of their time at company offices, conferences, etc. elsewhere. But presumably there is some threshold beyond which you're supposed to be filing taxes in other locales.

New York city has its own income tax rate of 3.9% for high earners. This can be quite a bit of money for hedge fund managers/owners. I've read that some of them live outside NYC to avoid the tax but need to hire a full time person to document and make sure they are not counted as a NYC resident by the city. You can only spend so many nights in NYC and not be counted as a resident, show proof of you being somewhere else, etc.

Income taxes has so many bad consequences. It would be great to ban it and replace it with land value taxes.

The letter of the law in a lot of places can be even worse than that. [1] There's been federal legislation proposed but AFAIK, nothing has been passed. A lot of states theoretically require you to file a tax return even if you only travel there for a day. Of course, I'd be shocked if pretty much anyone complied with that for sometimes travel. But it means lots of people are basically committing tax fraud; many/most probably don't even know they are.

[1] https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...

I did on internship in Texas when living in California. I had to pay California state income tax on what I earned there. Luckily Texas has no state income tax or I would have been paying in both states.

> If you move from California to another country, and are subject to US Federal Income tax, and don't qualify for an exemption, the Franchise Tax Board still considers you a resident of the state, and as such, taxes you on your worldwide income; as you did not end your residency by establishing residency in another state.

While this is strictly correct, I think the implications of what you wrote are too strong. If you move from California to another country or U.S. state, the requirements to get an "exemption" from California tax residency are essentially "convince the FTB that you have weaker ties to California than to your new location."

While arbitrary and open to abuse in theory, it appears less so in practice. Quoting from California's Guidelines For Determining [Tax] Resident Status [1], heading "Leaving California" on page 6:

> Example 4 - You and your spouse/RDP are California residents. You accept a contract to work in South America for 16 months. You lease an apartment near the job site. Your contract states that your employer will arrange your return back to California when your contract expires. Your spouse/RDP and your children will remain in California residing in the home you own.

> Determination: You maintain strong ties with California because your spouse/RDP and children remain in your California home during your absence. Your intent is to return to California, and your absence is temporary and transitory. You remain a California resident during your absence. You are taxed on income from all sources, including income earned in South America.

> Example 5 - You receive and accept a permanent job offer in Spain. You and your spouse/RDP sell your home in California, pack all of your possessions and move to Spain on May 5, 2019, with your children. You lease an apartment and enroll your children in school in Spain. You obtain a driver’s license from Spain and make numerous social connections in your new home. You have no intention of returning to California.

> Determination: You are a part-year resident. Through May 4, 2019, you were a California resident. On May 5, 2019, you became a nonresident. All your income while you were a resident is taxable by California. While you are a nonresident, only income from California sources is taxable by California.

> Example 6 - You are a resident of California. You accept a 15-month assignment in Saudi Arabia. You put your personal belongings, including your automobile, in storage in California. You have a California driver’s license and are registered to vote in California. You maintain bank accounts in California. In Saudi Arabia, you stay in a compound provided for you by your employer, and the only ties you establish there are connected to your employment. Upon completion of your assignment, you will return to California.

> Determination: You have maintained greater connections with California than you have established in Saudi Arabia. Your absence is for a temporary or transitory purpose. Therefore, you remain a California resident. As a California resident, your income from all sources is taxable by California, including the income that you earned from your assignment in Saudi Arabia.

Example 5 above is closest to what I think you were talking about by "moving from California to another country." The only way I think FTB could go after you for here is to argue that you could have an "intention" of returning to California eventually, and I do not know whether keeping your American bank accounts at California banks would be enough of a hook for FTB to decide it's worth the effort to try that argument.

For myself, if I did move from California to become an indefinite expat, I wouldn't worry too much about the FTB going after me. Opinions may vary, of course.

[1] CA FTB Publication 1031, 2019 edition: https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf

Thanks! I hadn't seen the FTB guidance for example 5. I think the tricky bit comes when you plan to live in another country for an indefinite period of at least several years, but not forever (and without any specific return state in mind), and keep a storage unit (in California) with some stuff that you want to keep, but don't want to move to another country because of the expense.

FTB can use 'has a storage unit in California' as a factor; and maybe combined with California banks and California voting, and maybe a California mailing address, if you use friends/family to forward your mail, could be enough to tip the scales for them. It's rather opaque.

What if you have your own CA LLC? Would they require paying a tax on its sale even if it's re-incorporated in another state?

This looks like you are making stuff up.

I don't think it's a small motivation of Musk to escape the tax rate when he starts to sell his shares. Just because he vested them while in CA - if he's a resident of Texas when he sells I don't think he owes CA a dime.

I wasn't responding specifically to Musk's tax burden, but the question of why would someone who moved out of the state still be paying taxes to the state several years later.

It depends on what type of shares/options/equity grants, and what's still vesting, and what isn't.

ISOs that are exercised in a qualifying disposition are taxed based on residency on the day of exercise.

RSUs that vest while you're a resident are taxed on vest day, and any capital gains from that are taxed based on residency on the day of the sale, yes.

RSUs that vest while you're not a resident are taxed on vest day, and a portion of the income will be california source if you worked in California during a portion of the vesting period, or if you were a residing during a portion of the vesting period.

https://www.ftb.ca.gov/forms/misc/1004.html#E-Restricted-Sto...