California Math and the 3.6% (sales, 2015, how much)

[sunshine7793]

It has been stated several times on these forums that California taxes are only slightly higher than the lowest state. The number quoted was that CA taxes are 3.6% higher than the lowest state.

According to the following table the tax bite in CA as of 2010 was 11.2% compared to 7.0% in Alaska. Subtracting 7.0 from 11.2 gives 4.2. But that does not mean that CA taxes are only 4.2% higher than Alaska. In fact CA taxes are 60% higher than Alaska. Or to use another state CA taxes are 42% higher than Texas which has a 7.9% tax bite.

It is disingenuous to compare CA with 11.2% with Texas at 7.9% and say that there is only a 3.3% difference. That is not the way to calculate percentages although I suspect that there are many CA high school grads who are clueless on how to make such a simple calculation.

Let's take real numbers. A guy has built his company large enough to employ 2500 emoloyees and he is making $10 million per year. In CA with all $10 million subject to the 11.2% bite he pays $1,120,000 in taxes. But in Texas with their 7.9% bite he pays $790,000 in taxes. That's a difference of $330,000 to be saved each year by moving to Texas. And it means that he is paying 42% more in state taxes by staying in CA instead of moving to Texas. Not a mere 3.3% as others would have you believe.

Here is the table that compares total tax bite by state. Keep in mind that this is a 2010 table. Under the new 13.3% rate for high earners the penalty for living in CA becomes much greater than shown in this table.

State and Local Tax Burdens: All States, One Year, 1977 - 2010 | Tax Foundation

Let's try to be honest when using statistics.

[serialdriller]

I dropped out of la unified school district high school. All the math too complicated...

All I know is come here illegal and work under table then don't have to worry about 3.6%

And my kids get free education too lol!!

[EscapeCalifornia]

Originally Posted by serialdriller

I dropped out of la unified school district high school. All the math too complicated...

All I know is come here illegal and work under table then don't have to worry about 3.6%

And my kids get free education too lol!!

No forget the WIC!

[capoeira]

Originally Posted by sunshine7793

It is disingenuous to compare CA with 11.2% with Texas at 7.9% and say that there is only a 3.3% difference. That is not the way to calculate percentages although I suspect that there are many CA high school grads who are clueless on how to make such a simple calculation.

Let's take real numbers. A guy has built his company large enough to employ 2500 emoloyees and he is making $10 million per year. In CA with all $10 million subject to the 11.2% bite he pays $1,120,000 in taxes. But in Texas with their 7.9% bite he pays $790,000 in taxes. That's a difference of $330,000 to be saved each year by moving to Texas. And it means that he is paying 42% more in state taxes by staying in CA instead of moving to Texas. Not a mere 3.3% as others would have you believe.

Those tax foundation numbers are per capita numbers. They are completely meaningless for assessing one's individual circumstances! The guy in your example will not be paying anywhere near $790,000 in Texas taxes since the income tax rate in Texas is 0%. And he has control of how much sales tax and property tax he pays based on how much he buys and how big a home he chooses to live in.

The burden of California taxes is heavily weighted on the highest income earners. How can his 1.1 million in taxes average out to an average of $4910 per capita California taxes? If the guy in the example is paying 1.1 Million and 223 people are not paying any taxes,this will give the per capita number from the tax foundation.

I predict by 2014-2015 California will be taking in less money as a result of Proposition 30. Since it is retroactive California will do well in 2012. In 2013 people will be making plans to leave. By 2014 they will be safely out of here!

[yeahthatguy]

Originally Posted by capoeira

Those tax foundation numbers are per capita numbers. They are completely meaningless for assessing one's individual circumstances! The guy in your example will not be paying anywhere near $790,000 in Texas taxes since the income tax rate in Texas is 0%. And he has control of how much sales tax and property tax he pays based on how much he buys and how big a home he chooses to live in.

The burden of California taxes is heavily weighted on the highest income earners. How can his 1.1 million in taxes average out to an average of $4910 per capita California taxes? If the guy in the example is paying 1.1 Million and 223 people are not paying any taxes,this will give the per capita number from the tax foundation.

I predict by 2014-2015 California will be taking in less money as a result of Proposition 30. Since it is retroactive California will do well in 2012. In 2013 people will be making plans to leave. By 2014 they will be safely out of here!

You'd be surprised. I left in 2012 .. Sold my loss positions ahead of my move. Re bought them into my 401k. waited past the wash sale rule trigger. Rebought the positions after I established residency in the state I now reside and held my gain positions (no tax until I sell.. did not sell not while in CA). My salaried job I couldn't optimize.. Actually I did =P, I planned my exit for the middle of the year so I would have a smaller portion of my income taxed by the state. I figured Prop30 among the current idiocy in Washington was going to pass. It was the last straw for me as well. Knowing of many friends still in the bay and several friends on wallstreet, trust me, people have already had plans in place for what is already unfolding. I wholefully agree w/ your predictions capoeira. Many companies are accelerating dividend payouts before the end of the year due to the moron show in Washington. Effectively paying a big one time dividend to shareholders before the tax law changes in 2013. Thus, I also agree that states/federal will see a juicy bump in tax revenue going into years end. Combine that w/ monied sellers liquidating to avoid federal tax increase in the years to come... Things will look really Rosie in 2012 w.r.t to tax revenue.. But man oh man, It's going to get ugly after that.

It's a good thing though. Everyone wants to hike taxes and they're going to get exactly what market/economy/treatment from corporations goes along w/ that.
I'll also predict the cost (rates) to borrow money for people/states/etc are going to rise in lockstep w/ any additional tax increase on the investment income derived from those who profit from it.
It's going to be a roller coaster ride as capital shifts and finds new tax optimal homes/arrangements.

[Curmudgeon]

Originally Posted by sunshine7793

It has been stated several times on these forums that California taxes are only slightly higher than the lowest state. The number quoted was that CA taxes are 3.6% higher than the lowest state.

Let's try to be honest when using statistics.

Several times? How about ad infinitum, ad nauseum despite anecdotal evidence to the contrary from people who have actually moved elsewhere and reaped significant benefits from lower taxes. But of course, let's not let reality interfere with idealistic fantasy. Paper tigers and red herring proliferate.

To some, honesty only applies when it fits neatly into their ideology.

[SunnyTXsmile]

Taxes are higher in CA than some other places. Big deal. Either take it, or leave it. No one is making anyone live in CA. I still don't get the point of this never-ending topic.

If CA works for you: live there. If CA doesn't work for you: don't live there. It's really just that simple.

[.highnlite]

I like the tax foundation numbers, they are a respected conservative organization. That their numbers upset people who apparently don't have a life is simply amusing.

The point I continually make is that there is not a major difference between CA and so called low tax states. Certainly not enough to impact one's economic life to any significant degree.

I have mentioned elsewhere the dollar amount of property tax the family farms pay, it is substantial, but in most of the so called low tax states it would be much higher, I imagine, I suppose one of the people who obsess over taxes can figure out property tax rates for places like Texas, Mississippi, Tennessee etc.

If we all lived in the medieval period and were subject to the whims of the local baron, or duke or such, he would assess a certain tax level, and you would pay it, or lose your head. Taxes are part of life, and as Ben Franklin said, "nothing in life is certain but death and taxes". Obsessing over taxes has gone on for centuries, and has been completely useless for centuries.

My suggestion is to pay the outrageous fee for a fishing permit, climb into your carcachita and go fishing.

[Curmudgeon]

[Perry Mason]

Here is something to consider. California is the only state with no oil severance tax, even Texas has one and I bet that they wouldn't even get close to repealing it, so it's not like there aren't other states with more far-reaching taxes than California. Texas is taking in a lot of revenue, the burden is just different because they have high energy production and have the sense enough to charge a fee for extraction.