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Wow you left out a big one! Requirement taxes in CA are the most oppressive in the entire US. Although Social Security benefits are exempt, all other forms of retirement income are fully taxed. California residents pay the highest income taxes in the U.S. The statewide sales tax is high, too. Real estate is assessed at 100% of market value.
Correction. California MILLIONAIRES will pay the highest income taxes in the U.S. When you actually look at the tax brackets you will find that the average household here pays a pretty low income tax rate. For instance the average household income here in CA is 61k. If you look at the tax brackets:
Assuming it's a couple and that all of that is taxable (impossible since they will at least have a standard deduction), they will end up paying about $1935 in income taxes. That's a tax rate of just 3.17% for the average household; actually it will be less than this since they at least have a standard deduction. Once you account for the fact that average household income in CA is actually 10.9% higher than TX (61k vs 55k), that average household in CA will actually take home more money even after taxes.
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Originally Posted by Matadora
Contrary to what you think it's not the biggest selling point.
Okay, then what is? I'm curious since usually the first thing people talk about when talking about the great state of Texas is that it has no income tax.
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Originally Posted by Matadora
Wrong
The California (CA) state sales tax rate is currently 6.5%. However, California adds a mandatory local rate of 1% that increases the total state sales and use tax base to 7.5%. Depending on local municipalities, the total tax rate can be as high at 10.0%. State and local taxes can reach 9.25% in many cities.
Where I live it's 9.25%
The state has no control over what the local municipalities do beyond 7.5%, so blaming the state for the local surcharges is disingenuous. If you really want to count local add-ons, then to be fair Texas also has a potential local municipality increase up to 2% over the state rate. So you are looking at up to 8.25% in Texas versus your local 9.25%. Funny how you conveniently left that part out eh? Either way, this is splitting hairs. Unless you are splurging, the difference of 1 or 2% on sales tax is peanuts. For instance, that difference of 1% between the maximum Texas rate and your local rate. You would have to spend 100k to save 1k on sales tax.
Texas Gas Tax per gallon: 38.40 c/gal On top of that we pay much less at the pump for a gallon of gas then you do here in CA.
Ca Gas Tax per gallon: 60.75 c/gal
As usual, it is you that is mistaken. Those values you listed include the FEDERAL gas tax of 18.4 c/gal which you pay in every state. Once you subtract that out, you arrive at the STATE gas taxes which coincidentally turn out to be exactly the values I listed earlier. Funny how that works out eh?
But again, like the sales tax this is splitting hairs. For most folks the difference here is also going to be pretty small. Go ahead and count up how many gallons you used last year, and see what the difference is.
Quote:
Originally Posted by Matadora
Not an advantage when you figure in the cost of comparable houses that you can purchase in each state and then you factor in CA's state income tax. Those in CA who are not paying much into the state income tax do not represent those buying houses in CA. Most here cannot afford to purchase a home. This can't be said for most in Texas.
This is a crock. Your fuzzy math does not represent reality.
It's far more representative of reality than your 1-sided rant. I gave Texas a pretty fair shake, acknowledging it's income tax benefits as well as potential savings from lower sales and gas tax. I even acknowledged that you can get a larger home in Texas. You on the other hand, talk about the local sales tax surcharges in CA while conveniently leaving them out for Texas. You can't even subtract out the federal gas tax in your comparison. You rail on about income tax this and income tax that, and yet it's worth pointing out that average household income in CA is higher than Texas which for most households will more than offset most of this.
Heck, you can't even acknowledge that CA's has property tax benefits, instead railing on about "comparable homes" which is largely personal preference. Believe it or not, having a lot of sqft is not the only the only consideration to buying a house. Surrounding area (crime/schools/etc.), future appreciation potential, and yes even that lovely CA weather will play a factor as well. If having a 4k sqft house with a huge lot is your top priority, then by all means go live in Texas. Personally I'll take a smaller house with better weather and significantly better future potential.
Last edited by AndyChrono; 09-14-2015 at 11:56 AM..
If having a 4k sqft house with a huge lot is your top priority, then by all means go live in Texas. Personally I'll take a smaller house with better weather and significantly better future potential.
Me too. I had a huge house by CA standards (3K sq ft). What people forget when they look at the sticker price is how much it costs to heat and AC a house that size, how much it costs to replace anything: roof, windows, window coverings, flooring, and how much time is spent cleaning and maintaining the thing. I got over my love of a big house REAL FAST. But I wouldn't fault anyone who needs to find that out for themselves. No one could have told me anything back in the day either.
Also to your point, my big house was in CA. Bought it in 1997 for $280K. Sold it 10 years later for $600K and that was AFTER the bubble burst and prices started dropping. I have not heard that you can do that in TX, but I don't follow the market for states I don't live in, so who knows.
I just stumbled upon this thread on the Real Estate forum where folks from other states are complaining about losing their paid-off homes because they can't afford the annual skyrocketing property taxes. //www.city-data.com/forum/real-...h-america.html
I wonder how long it will be before the California haters come running back from Texas when they discover the grass wasn't exactly greener in other cow pastures. Don't get me wrong, I hope they leave and don't come back. The state prefers innovators, not whiners. But I sure would love to be there when reality bites these guys in the butt.
So whats your point, the property tax rate is higher? Does that even matter if the values are out of site in one state vs another....
It's funny how people like to think everything is more expensive in CA.
Prop 13 changed our real estate laws, so you will always pay tax on the original purchase price, with an annual increase allowed of only 1.5% or something like that.
This was not always the case. I remember back in the 1970's when people were driven out of their paid-off homes because they couldn't afford taxes on the newly assessed values. Some people bought homes for around $20,000 for instance, that were eventually worth a million dollars. They couldn't pay taxes on the newly assessed values, and either lost their homes to the city/county, or they had to sell them and move far away.
Prop 13 protected people in CA from having to deal with that anymore.
People don't realize how valuable this is. How essential it is. I cringe when I hear people talk about how we should repeal Prop 13 so we'll have more money for this and that.
So, I'm not surprised by your OP at all. This is what happens, it happened here and it was devastating. Fortunately, being the amazing people we are here in CA, we fixed it here. I hope others will follow suit in other states.
The thing is, a city/county/state will pay in the long run if they don't fix this problem. Either they will have people leaving in droves, driving down income, or they will have a bunch of people who are now relying on city/county/state resources such as low-income housing, food stamps, etc.
As usual, others could benefit from forward thinking Californians
Yeah, depends on what it is. I have a unique perspective having moved here last year from Texas, but having grown up and educated in California. I fully understand the differences. Its really a case of two different economies.
Me too. I had a huge house by CA standards (3K sq ft). What people forget when they look at the sticker price is how much it costs to heat and AC a house that size, how much it costs to replace anything: roof, windows, window coverings, flooring, and how much time is spent cleaning and maintaining the thing. I got over my love of a big house REAL FAST. But I wouldn't fault anyone who needs to find that out for themselves. No one could have told me anything back in the day either.
One of my cousins moved his family out to Texas last year near Frisco and plopped down 900k for a huge house in a brand spanking new neighborhood. A couple weeks ago I asked him how he's doing he tells me that he's doing fine but he might have to move back to CA for a smaller house or his wife might divorce him.
I'm pretty sure he's just joking... (I hope...) But yes, housekeeping for such a big house would be a PITA.
One of my cousins moved his family out to Texas last year near Frisco and plopped down 900k for a huge house in a brand spanking new neighborhood. A couple weeks ago I asked him how he's doing he tells me that he's doing fine but he might have to move back to CA for a smaller house or his wife might divorce him.
I'm pretty sure he's just joking... (I hope...) But yes, housekeeping for such a big house would be a PITA.
900k is a really nice house there, but probably 15-18k in property tax
Against a lower basis a high property tax is not a big deal.
When we cash out of here and relo for retirement our basis will be so low that the highest property taxes at the end of our ownership will still not equal what we pay here.
I know a lot of folks who moved here like me. I told them all the same thing: "get a modest house, bank and invest the rest."
I know ONE person who did it. She's got the same square footage she had on the Coast and is set for life. The rest are miserable, having achieved basically zero economic advantage in the move (except the two business-owners, they're happy as clams. But that's because TX is about 10,000% more business-friendly, has nothing to do with this topic). Texas is gentrifying quickly as economic refugees flood the place, particularly from the upper midwest, and RE prices are going through the roof. Fortunately, most of the land is not coastal and can be expanded in multiple directions, so suburbs that would be two major topological features away from your employment site (e.g., my brother who's a programmer who had to go out to Livermore to afford a house), can instead be much closer and with less of a commute.*
That certainly makes it no panacea. It's always going to be a case of "pick your poison." I know some folks who would benefit to moving (mostly folks like me who didn't want to be perma-renters and for whom home-buying in coastal CA was simply impossible), and a bunch for whom it would bring no advantage whatsoever, especially people with government jobs, who are basically set for life in CA and would live much, much smaller in TX.
*fair warning. DFW drivers are all completely psychotic.
Correction. California MILLIONAIRES will pay the highest income taxes in the U.S. When you actually look at the tax brackets you will find that the average household here pays a pretty low income tax rate. For instance the average household income here in CA is 61k. If you look at the tax brackets:
Assuming it's a couple and that all of that is taxable (impossible since they will at least have a standard deduction), they will end up paying about $1935 in income taxes. That's a tax rate of just 3.17% for the average household; actually it will be less than this since they at least have a standard deduction. Once you account for the fact that average household income in CA is actually 10.9% higher than TX (61k vs 55k), that average household in CA will actually take home more money even after taxes.
Okay, then what is? I'm curious since usually the first thing people talk about when talking about the great state of Texas is that it has no income tax.
The state has no control over what the local municipalities do beyond 7.5%, so blaming the state for the local surcharges is disingenuous. If you really want to count local add-ons, then to be fair Texas also has a potential local municipality increase up to 2% over the state rate. So you are looking at up to 8.25% in Texas versus your local 9.25%. Funny how you conveniently left that part out eh? Either way, this is splitting hairs. Unless you are splurging, the difference of 1 or 2% on sales tax is peanuts. For instance, that difference of 1% between the maximum Texas rate and your local rate. You would have to spend 100k to save 1k on sales tax.
As usual, it is you that is mistaken. Those values you listed include the FEDERAL gas tax of 18.4 c/gal which you pay in every state. Once you subtract that out, you arrive at the STATE gas taxes which coincidentally turn out to be exactly the values I listed earlier. Funny how that works out eh?
But again, like the sales tax this is splitting hairs. For most folks the difference here is also going to be pretty small. Go ahead and count up how many gallons you used last year, and see what the difference is.
It's far more representative of reality than your 1-sided rant. I gave Texas a pretty fair shake, acknowledging it's income tax benefits as well as potential savings from lower sales and gas tax. I even acknowledged that you can get a larger home in Texas. You on the other hand, talk about the local sales tax surcharges in CA while conveniently leaving them out for Texas. You can't even subtract out the federal gas tax in your comparison. You rail on about income tax this and income tax that, and yet it's worth pointing out that average household income in CA is higher than Texas which for most households will more than offset most of this.
Heck, you can't even acknowledge that CA's has property tax benefits, instead railing on about "comparable homes" which is largely personal preference. Believe it or not, having a lot of sqft is not the only the only consideration to buying a house. Surrounding area (crime/schools/etc.), future appreciation potential, and yes even that lovely CA weather will play a factor as well. If having a 4k sqft house with a huge lot is your top priority, then by all means go live in Texas. Personally I'll take a smaller house with better weather and significantly better future potential.
in Texas you don't pay the high property tax if you are not a home owner, you could rent and make a bunch of money income tax free. The "average" wage earner is each state more likely rents than owns, so the benefit for the averave family is much greater in Texas.
Also, rent is also much lower in Texas compared to ca, let alone the business centers in ca.
in Texas you don't pay the high property tax if you are not a home owner, you could rent and make a bunch of money income tax free. The "average" wage earner is each state more likely rents than owns, so the benefit for the averave family is much greater in Texas.
Also, rent is also much lower in Texas compared to ca, let alone the business centers in ca.
Hence why I mentioned in my original post:
Quote:
if you are renting then Texas easily wins out since you won't be able to capitalize on property tax savings from CA.
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