Earn above average salary and enjoy good weather, politics, and outdoors.
Earn a median salary and enjoy okay weather and lower taxes.
By More fair, I mean, CA has a similar tax rate across incomes, but does place more burden on top earners than TX does.
TX on the other hand, is unfairly taxing people more at lower incomes, and less for people at higher incomes.
TX policies don't align with my moral beliefs–I would not decide to raise my children there given the way the state is governed. That's of course a personal opinion, but I don't want to spend the rest of my life fighting for rights that we have in CA.
I agree that CA's housing situation does often enrich landowners at the expense of lower-income folks, but my take on that is that's more caused by NIMBYism and an unwillingness to build enough housing to meet demand. The Prop-13-fueled property tax distortion certainly plays a role, but I don't think it's the dominating factor. CA's property taxes are lower (by percentage of home value) than the national average, but not by all that much, on the order of a tenth of a percent or so.
Property tax is absolutely not a progressive tax, by definition: everyone pays the same rate based on the value of their home, not based on their income or means.
Exactly. In other words, especially where supply is constrained, the property tax is incident on the landowner rather than the tenant.
> my take on that is that's more caused by NIMBYism and an unwillingness to build enough housing to meet demand
Yes, the difference in land use is bigger than the difference in tax rates. However, when property taxes are higher, there is more incentive for cities and households to allow more housing. And even if you believe that property taxes are regressive, it should give you pause to realize that it is more than made up for by California’s bad land use restrictions.
> Property tax is absolutely not a progressive tax, by definition: everyone pays the same rate based on the value of their home, not based on their income or means.
No, that’s just who writes the check. You had it right the first time. The tax incidence is who bears the burden of the tax. Since property taxes are capitalized into the price and the supply is not very elastic, an increase in projected tax payments (due to an increasing rate or increasing property value) are largely borne by the landowner (in the form of a lower sales price or a sales price that grows more slowly) rather than the young worker who buys/rents it.
> However, when property taxes are higher, there is more incentive for cities and households to allow more housing.
True, and what tends to happen in CA is that cities will approve commercial development over residential, since they can get much more tax revenue out of commercial property.
But I don't think CA's property taxes are too low; from a little searching it seems like CA's average property tax rate is only slightly below the national average. Meanwhile, Texas' clocks in at several multiples of the national average.
I'm not really sure what you're getting on about with the rest of your post, though. Property taxes, as implemented pretty much everywhere in the US, are regressive. Full stop. It doesn't matter "who writes the check". Landlords will pass on the cost of property taxes to renters. I don't really see evidence that home prices are so much lower in Texas due to the high property tax. Lower, certainly, but I would still much rather buy a house in the bay area with its inflated prices over a house in Austin.
And I expect as demand goes up in Austin, home prices will go up (if slower), and tax rates will just help make homes even more unaffordable there for lower income folks. I expect it's easier to build in Austin, but it still takes time, and likely any new demand for housing in Austin isn't primarily in the outskirts of town where things are cheaper.
[0] https://www.motherjones.com/kevin-drum/2019/11/taxes-are-sur...
Not true. Income taxes (as implemented in the US) have enormous blind spots that favor homeowners at the expense of renters: untaxed imputed rent and the capital gains tax exclusion for your main home. These undermine the claim that the income tax is more progressive than the property tax.
> Landlords will pass on the cost of property taxes to renters.
Not for the most part. The question is, when the property tax increases, how much of it is eaten by the landlord (in lower post-tax rent), and how much is a burden on the tenant (in higher gross rent due to reduced housing supply)? In California where supply is inelastic, I would argue that the low property tax is almost all a windfall to the landowner rather than the tenant.
WA at least doesn't have a prop 13.
For example, here is Tech: https://i.imgur.com/rHBVWRt.png
I used to live in California. There is no better state than California. If house price falls, I would buy another house in California.
Musk has not paid any tax because he hasn't cashed out any of his stock options yet. Some of his options will expire next year so he will pay tax then, but I am sure California will get the lion share of the tax revenue (as Musk lived in California up to 2021.)
Capital gains is taxed on the residence at time of sale, not time of purchase. So if Musk sells when he’s not a resident of CA, he won’t pay CA taxes.
And yes indeed, the taxable event is vesting, it indeed happens outside of ca, and yes CA still intends to tax you! They will even come after you in another state for it, after you permanently move out.
!!!
Also, the methodology you’ve described for avoiding taxes is used to benefit from offshore holdings, not avoid paying taxes on locally held assets.
The only way they can be used to avoid paying taxes all together is if you’re trying to derive income from assets held (usually secretly) offshore, and this is almost always criminal tax evasion. The only thing they’re achieving in this circumstance is basically an international fund transfer without creating any taxable income. There are no secret tricks you can do to transfer your assets beyond the control of the IRS, you can’t “give” them to a bank, and if they’re collected as collateral on a defaulted loan, that’s a taxable event too.
Companies can get away with moving their profits to other jurisdictions, because a collection of subsidiary companies can exist in as many different tax jurisdictions as you want. Individuals can’t (legally) do this, especially not US citizens, because they remain US tax residents for their entire lives, regardless of where they live or work.
A lot of billionaires don’t pay a lot of taxes every year, because they don’t have a lot of income every year. The only way to turn it into a scandal is if you ignore all the years in which they do pay a lot of taxes. Which is, of course, fundamentally stupid.
His tax avoidance is even more striking if you examine 2006 to 2018, a period for which ProPublica has complete data. Bezos’ wealth increased by $127 billion, according to Forbes, but he reported a total of $6.5 billion in income. The $1.4 billion he paid in personal federal taxes is a massive number — yet it amounts to a 1.1% true tax rate on the rise in his fortune.
Why should we ignore these 13 years over which Bezos made $127B? Who would benefit from that?
You’re literally just getting upset at him for not liquidating his entire position of Amazon shares (or options) every year. If he ever wants to turn the theoretical number some Forbes intern came up with for his net worth into income, then he’ll have to pay tax on it. He could theoretically live the rest of his life without selling his shares if he wanted to, just like you or I never have to sell any shares, or property, or any other type of asset we own. However if he did that, the IRS is going to come and take the tax he owes from his estate.
There is no tax evasion taking place here, this isn’t even a loophole. It’s the same treatment everybody gets.
You don’t have to sell your assets if you don’t want to, and you don’t make a taxable profit from selling your assets… unless you sell them. The propublica article you’re quoting is designed entirely to rage-bait people who don’t want to think about the topic long enough to figure that very basic fact out.
Since most people don't own billions of dollars worth of shares in giant firms, this "treatment" is certainly not what "everybody gets". Not even the billionaires' most ardent online white knights get this treatment.
Even with interest rates low, the prime rate is 3.25 [0]. So isn’t it worse to pay 3% interest per year than a 15-25% capital gain once? I assume Musk thinks he’ll live more than 10 years.
[0] https://www.bankrate.com/rates/interest-rates/wall-street-pr...
[0] https://www.irs.gov/taxtopics/tc505
[1] https://www.propublica.org/article/the-secret-irs-files-trov...
Which is why the current congress push to ramp up capital gains to get money back from the rich is super super misguided. It screws startup founders like myself, but it literally has no impact on the mega rich.
ProPublica can bang the drum all they want. In USA, the big media firms are all controlled by very rich people who don't want this sort of story to stay in the mainstream consciousness for more than a couple of days. So, information like this disappears more quickly than the average citizen can understand it.
https://www.sambrotman.com/personal-income-tax-residency-cal...
Or California's housing market is just too fucked. I think this is more plausible than the income tax too high theory.
It’s all anecdotal but I’ve only heard negative things about working at a Musk co.
I backed away real quick.
CA also has some fairly unique (and IMO unfortunate) tax rules where they will still require you to pay taxes on some things even after you've moved out of state. I believe option exercise (for options granted+vested while living in CA) is one of those.
Is that incorrect?
IMHO the high income tax regime found in California is actually a function of high density, high income, knowledge based earners moving in.
If enough of them arrive, demands for services (schools, fire, police) and infrastructure (i.e. light rail, etc.) will increase. The original NIMBY locals will initially love the increasing property values and new restaurants... until their property tax bills start rising to astronomical sums.
The state will then need to push for Prop 13 like property tax capping legislation at which point the state legislature will need to raise funds somehow and magically they will end up with a 10%-20% state income tax on super high income earners like Elon, et. al.
That said - just a IMHO prediction and just saying that you can't blame it entirely on just California(ns) being dysfunctional. :)
[1] https://www.youtube.com/watch?v=AbXLnmLEevQ
Property tax values in Austin just saw the highest increase in Austin History
Just compare the building/facilities of any top bay area public school with that of Texas. The former look like shack while the latter look like mini universities. Bay area schools still rank higher because of students and parents, its nothing to do with the state.
Palo Alto High School is literally a mini university. Just do a google image search. You can't tell it apart from Stanford.
The high taxes of CA are due to the state sector having taken over the political system, via control over the dominant narrative/ideology.
To give just one example, emergency workers can retire at 55 with 90% of their pension, that averages $108,000 per year.
California now has $1 trillion in pension obligations for its unionized public sector workers.
Have you seen where the money goes? It ain’t supporting a “technology infrastructure”.
How so? I put a salary of $300k in SF here, and came up with 38%: https://smartasset.com/taxes/california-tax-calculator#c0piT.... Obviously Fremont workers do not need to live in SF.
Honestly, coming from a third world country where I got taxed more and having had to work in Austin and Atlanta before on previous jobs, taxes are the least of my complains for California. Yeah they should fix property taxes... but my main complaint is that even though all politicians like speaking a mouthful about helping the poor and how broken healthcare is, every single government program that's supposed to help the mentally ill is utterly and completely broken beyond belief. And I'm saying this coming from Argentina that as a country has around the same population and way less GDP.
Literally the only thing about California that doesn't feel "first wordly" as all the nice places in Europe I've been to is how it deals with people that need mental health or that have housing issues. I tried discussing this with every other politician I meet or something but besides condescending smiles because of the perceived trauma they think growing up in Latin America caused (it didn't) I never get any iota of acknowledgement that something in the world is wrong. Except for the Republicans, which is the only problem in the US, apparently.
Not a lot of people hitting that regularly, but I imagine it can sting a little if you've got a more proletarian salary normally and are hitting that region just once because of say, a start up liquidity windfall
https://washingtonstatewire.com/am-i-taxed-too-much-a-compar...
It’s often seemed like people in California would prefer that a manufacturing operations operate in Asia and come through their ports rather than operate in the middle/south US.
You're making the same conservative argument about wages: if you pay a living wage companies will flee. No, if a company can't pay a living wage, it shouldn't exist. Likewise, if a company can't manufacture products without destroying the environment, it shouldn't manufacture those products.
I'm just a conservative. A nature conservative.
Source: Sandi Metz 2019 RubyConf "Lucky You"
but also: https://ifstudies.org/blog/the-family-geography-of-the-ameri...
I wonder if something else is going on for California and Texas to rank behind Mississippi, Alabama, and Louisiana? I'd bet that the issue with the standard of measure, not the actual quality of education.
I should say I think its schools are fine, rather than great.
The SALT deduction wasn't repealed (for which a coherent argument could be made, though it would still be a bad idea), it was capped (for which there isn't even a principled argument.)
> High earners pay an effective tax rate of > 50%.
“High earners pay high rates” isn't exactly a sign of a backward tax regime.
Compared to what?
[1] https://www.usnews.com/news/best-states/rankings/infrastruct...
[2] https://infrastructurereportcard.org/state-item/california/
[3] https://www.usatoday.com/story/money/2019/07/08/states-that-...
Edit: Not sure why everyone is assuming I'm saying Texas is somehow better. I'm well aware of the power grid problems there as well. The question was "in comparison to what" and setting aside CA and TX, at last count there are 48 whole other states in the nation.
[1] https://www.sfgate.com/local/article/California-exodus-is-ju...
Zero growth isn't the right baseline. The fact that the population hasn't boomed means something is definitely wrong.
Washington state is a good alternative. It has all of California’s grievance politics and collectivism but with none of the tax burden.
That seems untrue, given Texas' shift toward purple. Certainly wealthy people in Texas (regardless of their politics) aren't affected too much by who sits in the state house, but there are plenty of Democrats in Texas who aren't wealthy.
And just as a random example, I bet women who are looking to terminate unwanted pregnancies in Texas right now are probably sick of the Christian zealots.
Family wise though, moving to Texas is bad for half the members of your family. Half the people in your family, aren't going to agree with the Texas government's views, whether you want to force them to or not.
You do realize that there are plenty of women in Texas (and elsewhere) who support curtailing access to (or even outright banning) abortion, right?
Edit: I didn't expect this number to be so high, but apparently 43% of women in the US identify as pro-life (https://news.gallup.com/poll/244709/pro-choice-pro-life-2018...).
The speed limit on the freeways and tollways is 70 mph, so distant places that would take over hour to get to in Seattle are 15 min drives here.
There are millions of people who think this exact same thing about California.
Go outside sometime, you may be surprised.
It's stuff like this (from another post of yours) that shows your ignorance of people's views:
> If someone can't agree that (a) the current state of climate change is bad, and (b) women deserve bodily autonomy, their opinion simply doesn't matter to me. IMO they also shouldn't be around women.
I agree that women deserve bodily autonomy, and I'm fine with abortion if it's a choice made freely, but there are tens of millions of women -- 43% of women in the US[0] -- who believe abortion is wrong. Not sure how many of them also want to impose that view on other women who don't share their views, but I expect that number still ranks in the millions. Should those women not be around... themselves?
[0] https://news.gallup.com/poll/244709/pro-choice-pro-life-2018...
High earners pay an effective tax rate of > 50%. They are partially picking up the slack from Prop 13, which artificially distorts the housing market by allowing longtime homeowners to pay property taxes based on decades-old assessed values while sitting on millions in equity gains.
So young, high earners see the state taking a massive chunk of their paycheck in exchange for middling infrastructure and pitiful public schools while simultaneously putting its finger on the scale of a wildly inflated housing market.
The exodus will only pick up steam unless policymakers get their act together.