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High taxes be damned, the rich keep moving to California

latimes.com

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Re: High taxes be damned, the rich keep moving to California

#41

Post by gnicholas »

esf wrote: post #10
gnicholas wrote: post #3

Once tax day has come and the full force of the capped SALT deduction is felt, things may change. A high-earning couple with $500k in combined income (roughly $45k in state taxes) and a $2m home (roughly $20k in local taxes) will go from a $65k deduction to a $10k deduction.

Am half of a high earning couple in a bit above this range in California. Surprisingly, my taxes changed very little this year. In years prior, I always had to pay AMT, in which SALT deductions were already disallowed. The new tax law is basically a wash. I don't pay AMT, just pay higher regular. I didn't check exactly but my effective rate this year may even have gone down a little. Many people in this income range…

Interesting to hear this. I used to be a high-earner (was a tax lawyer before a startup founder) in CA and never ran into the AMT. I see several folks mention the AMT below, but if no one was getting a SALT benefit before, how could the cap have been a revenue-raiser (which it was scored as) in the tax bill?

I realize that the lower rates help out high earners and can mitigate the effect of the SALT cap. But all high earners across the country get the benefit of low rates, whereas only the ones in high tax states get hit with the cap. So when weighing the choice between being a relatively high earners in a low tax state or a super high earners in a high tax state, the balance shifts toward the low tax state.

Re: High taxes be damned, the rich keep moving to California

#42

Post by lsc »

m0zg wrote: post #35
bthornbury wrote: post #28

Earlier quoted context omitted.

Might be able to afford an apartment

With a 2hr commute.

meh, if you don't have kids, $125K is plenty to live in a so so part of sunnyvale or mountain view (which is totally safe, just your apartment will be built in the '60s to working class standards, which isn't as bad as it sounds; the weather here means that having flimsy and poorly-insulated housing isn't as big of a deal as it would be otherwise.)

I mean, you won't be buying right now, but you will be able to save money; if we have another big drop in housing prices, you will be all set: otherwise, you will just have to move when you retire. (which actually is pretty sad, 'cause those social connections are really important. but just saying, if you have $125K/yr, two people can live here comfortably.)

If it's really important that you have a lot of room, you aren't going to like it here. Really, I think that's the big difference.

My own impression is that as a sysadmin without a degree, I get like 2x here what i would other places, and yeah, housing is more than 2x, but... housing is a kinda small part of my budget. I save a lot more working here, and have access to a lot more luxuries that don't involve personal space.

Honestly, if you wanted to get me to move? Probably the best thing you could promise me is a job with an office... or even just the sort of large cubicle my job role rated in the mid to late aughts. I mean, my job pays really well, the food is good and people are nice to me, and I really appreciate it, but it seems like every year my desk shrinks. I think the parking spot they reserve for the car I don't use is allocated more space than the desk where I sit all day.

Re: High taxes be damned, the rich keep moving to California

#43

Post by nostrademons »

lsc wrote: post #37
nostrademons wrote: post #30

Earlier quoted context omitted.

You get to control where it goes, rather than the government. For most people, their values are an extension of their identity. (This, BTW, is why we get values voters on both sides of the aisle who vote against their own economic self-interest for a party that supports the kind of world they want to live in.) If you're making 2x+ times what you actually need to live the personal lifestyle you want, the rest is going…

Right, but the previous comment suggests that you can reduce your personal tax liability to zero while still having some personal money paid to you: "pulls out only enough in salary to meet their expenses, makes an equivalent donation to charity to offset all their "income", and then pays zero in taxes." and that's confusing, 'cause say I can live off $100K/yr. So I pay myself $140K (or whatever) and pay the taxes on…

No, I mean that you pay yourself $100K and then you make a donation of $100K of securities, real estate, etc. to a charity out of assets that you control. You can deduct the full amount of "in kind" transfers to charity, and you don't need to pay the capital gains tax on them. The value of your charitable donation gets subtracted from your AGI, so you really can get to zero task liability this way. Meanwhile, you reinvest the remaining profits of the business so that the total value of your assets goes up by more than the $100K you paid yourself + $100K you donated to charity.

Re: High taxes be damned, the rich keep moving to California

#44

Post by blihp »

syspec wrote: post #15
nostrademons wrote: post #13

Earlier quoted context omitted.

Wealthy != high income. A high-earning couple might make $500K spread across 2 W-2 salaries, and then pay those $45K in state and ~$200K in federal taxes. A wealthy couple owns a network of business, reinvests all profits of those businesses in capital improvements to make more money in the future, pulls out only enough in salary to meet their expenses, makes an equivalent donation to charity to offset all their "inc…

Can you explain the charity portion, isn’t that the net same as not having the money? Sincere question

You set up your own charitable foundation/trust which you control. While technically not your money anymore, you get to decide how it gets spent. I even heard about a man who had his charity buy a portrait of himself ;-) Snark aside, lots of people with money do this and while they don't technically ever get to see that money themselves again, they can and do spend it in exchange for influence/favors.

Re: High taxes be damned, the rich keep moving to California

#45

Post by nrb »

mario0b1 wrote: post #4

>highest-in-the-nation 13.3% income tax rate That sounds very comfortable and affordable

Furthermore, the 7.1% (31-44k), 8.1% (44-56k), and 10.4% (56-286k) rates seem pretty excessive when those rates could be made significantly more progressive if a new bracket between 150k and 286k were created at a decently higher marginal rate, giving these 31-150k people much more productive dollars (these dollars will immediately be put back into the economy in the larger CA cities).

The very reasonable argument questioning this 13.3% top-level rate is: do the outcomes match the investment?

Re: High taxes be damned, the rich keep moving to California

#47

Post by AnthonyMouse »

alkibiades wrote: post #25

It defines rich as 125k. That definitely isn't rich in california. It also says there's a net migration outwards and that the middle class and poor are fleeing.

> It defines rich as 125k. That definitely isn't rich in california. It also says there's a net migration outwards and that the middle class and poor are fleeing.

In addition to that, another way of interpreting the numbers is that jobs in California continue to pay well.

There is obviously a difference between California being so great that all the people who make a lot of money want to live there and California being so expensive that companies can only attract people to move there by paying a lot of money.

Re: High taxes be damned, the rich keep moving to California

#48

Post by gnicholas »

xacaxulu wrote: post #40

Yes, they keep having their estates and legal residences in Florida, Texas, etc.

Maintaining residency outside of CA/NY/etc. isn’t as simple as pretending that a home in Texas is your primary residence. These states go after high earners and audit the number of days in/out of state, as well as drivers license, and even the location of pets. When there’s lots of tax revenue on the line, they dig up the details. Source: used to be a tax lawyer.

Re: High taxes be damned, the rich keep moving to California

#49

Post by [deleted] »

bsder wrote: post #39
nostrademons wrote: post #38

Earlier quoted context omitted.

[removed - this was not intended as a political comment but somehow it became such]

Planned Parenthood Federation of America (PPFA) is a tax-exempt 501c 3 and does health care. Planned Parenthood Action Fund (PPAF) is a properly taxed 501c 4 and does political action. Planned Parenthood are quite scrupulous about this given how often they wind up in the crosshairs. Would that the religious organizations received such scrutiny. Please take your GOP disinformation points somewhere else.

[deleted]

Re: High taxes be damned, the rich keep moving to California

#50

Post by dang »

gamechangr wrote: post #2

This has been posted a few times today... https://news.ycombinator.com/item?id=19359510

On HN, we don't count submissions as dupes if the story hasn't had significant attention yet. This is in the FAQ: https://news.ycombinator.com/newsfaq.html.

The idea is to give good stories multiple chances at attention, since otherwise the randomness in what makes it off /newest is too great.

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