Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Stay confused as I am not interested in your attempts to flame war.
If his friends moved back to CA because they looked at their future solely based on higher property taxes in Texas then I would have to say that was a pretty dumb move.
I wonder what type of house and in what area of CA they could purchase a comparable house as the ones you provided links to.
Then add on all the other Mickey Mouse taxes that CA imposes. It's a no-brainer financially.
No one is trying to flame here except for you when you accused someone of lying.
No one is trying to flame here except for you when you accused someone of lying.
Just man up and say you were wrong. Geez.
10K is not a flat across the board tax assessment on a property valued at 500,000.
Hint: Exemptions
The point is if you purchase a comparable house here in CA its going to cost you a lot more than buying a 500K house in Texas even with the higher property taxes.
The original point of the thread was not to argue comparable home prices throughout the country. Duh, Mayberry in the state of MiddleOfNoWhere is going to be lots cheaper than a home in California. Everybody knows that. I was simply shocked to hear about the high property taxes in the other thread (many who were talking about Tri-City areas) and how people were claiming that they lose their homes in old age because, despite paying off their house, they can't keep up with the inflating property taxes. Thus, fleeing CA looking for that cheap home somewhere else might not end up the eternal bliss people think it will be once you add up all the property tax you've paid over the course of 40+ years.
As for other taxes (I've not heard of the Mickey Mouse tax--is that in Anaheim? ) my personal opinion is that tax based on income or consumption at least gives residents some control over how much tax they pay. Seniors who don't spend much don't pay much sales tax. Income tax is pretty small in CA, and you obtain exemptions for all kinds of things, including number of dependents. Social Security is not subject to CA income tax, so there's another senior benefit. And while people argue sales tax, residents here know that food you buy at the grocery store is not subject to sales tax. You can, in essence, control the amount of tax you pay by controlling your behavior.
Most people who add up all taxes and do their homework find that California tends to fall in the middle of the pack when it comes to total taxes paid. But not all tax is created equal. IMO the taxes in California hit you hardest when you are young, making the highest income, spending the most money, driving the most, etc. The older you get, the less you do, the less you pay. That's my theory, at least.
Most people who add up all taxes and do their homework find that California tends to fall in the middle of the pack when it comes to total taxes paid. But not all tax is created equal. IMO the taxes in California hit you hardest when you are young, making the highest income, spending the most money, driving the most, etc. The older you get, the less you do, the less you pay. That's my theory, at least.
You touch on a very important point that unfortunately a lot of folks don't take into consideration. The 4 main state taxes that the average joe will run into are: Income Tax, Sales Tax, Gas Tax, and Property Tax. In comparison with Texas (since that seems to be going on in the thread):
Income Tax: Texas has no income tax which is undoubtedly it's biggest selling point. California has many tax brackets ranging from 1% to 13.3%, but most people will never go above the 9.3% bracket since that would require annual income over 254k (345k for couples). Just as an example, a married household with taxable income of 100k would pay about $5.5k in taxes for an income tax rate of 5.5%. When you consider that the median household income in California is about 61k, the average household will be paying an even smaller percentage, probably around 5%.
Sales Tax: California has 7.5% state sales tax vs Texas which has 6.25% state sales tax. Not much to say here - it's a 1.25% edge to Texas. Certain groceries & food products are non-taxable in both states so that's a wash. If say, you spent $1000 a month in discretionary non-grocery spending (12k a year), then being in Texas would only save you $150 in sales tax. Some folks might spend more or less, but either way the difference here is small - only a couple hundred dollars unless you really can afford to splurge.
Gas Tax: Texas has a 20c/gal gas tax vs California which has 42c/gal gas tax. If you use say 20 gallons per week that comes out to about 1040 gallons a year. 22 extra cents per gallon would thus be $228.80. Much like the sales tax, some folks might use more or less gas, but the difference is only a couple hundred dollars.
Property Tax: This is California's biggest advantage - California's property taxes are half that of Texas and Prop 13 caps the increases so even if your home explodes in value you won't get screwed by property taxes.
When you consider the first 3 tax categories, the gas and sales tax savings from being in Texas instead of CA are pretty small, on the order of a few hundred dollars. The largest saving from being in Texas is the income tax which for an average household will probably let them take home roughly 5% more of their income. Add in the sales and gas tax savings of a few hundred dollars. The question then becomes, does the property tax saving in California offset this? It depends on the value of your home of course. If you have a $500k home, then you will save about 5k in property taxes from California, which nearly evens out the previous 3 tax categories in one fell swoop! When you consider that the median home value on CA is 442k, that's not that far off so these kinds of savings are pretty widespread.
Consider that guy with a taxable income of 100k and a 500k house, as well as the discretionary spending and gas usage from earlier. He would save ~5.5k on income tax, $150 on sales tax, and $228.80 on gas tax from being in Texas. He would however, spend 5k more on property tax, so in the end his total tax savings from being in Texas is less than $1000. On the surface it still seems like Texas comes out on top.
However, the key thing that everyone discounts is home price appreciation. Home values in CA increase much faster than in Texas. A $500k home in Texas will likely be worth around $600k after 10 years and you will be taxed ~2% on that 600k. In CA, a $500k home could likely be worth almost $1 million in 10 years and because of Prop 13 you will only be paying 1% on a property tax basis of about 600k. Essentially you will be getting much better value out of your property taxes in CA.
So in the end, the guy in Texas probably ekes out a small edge on day-to-day, month-to-month, and even year-to-year taxes. After all, he saves nearly 1k a year on taxes! Over 10 years he would save about 10k in taxes! However, the irony is that 10 years later, the guy in California will have a net worth hundreds of thousands of dollars more simply due to home price appreciation.
Now the most common retort to this is that you can buy a massive 4000+ sqft house in Texas with a massive lot for 500k whereas in California that amount would only get you a 1500 sqft house with a small lot. All of this is true of course. But it's essentially a trade-off between comfort inside your home (Texas mansions) and comfort outside your home (CA weather) which will largely come down to personal preference. Also, to be fair here, if you are renting then Texas easily wins out since you won't be able to capitalize on property tax savings from CA. However, if you are going to buy a house and are in it for the long haul, then CA beats pretty much every other state in the long run simply due to property tax savings and home price appreciation.
What Californians don't seem to understand is even though Texas has higher property taxes you still come out ahead.What would a similar house like the the ones in the above post cost here in CA? Then add on all the other Micky mouse taxes that CA enforces. It's a no-brainer.
True, it is a no brainer.. houses are worth less in Texas because salaries are lower, you move to a place where salaries are higher, like California houses cost more. And please tell us about all the "mickey mouse" taxes that California enforces, I live in California and haven't heard about those....
You touch on a very important point that unfortunately a lot of folks don't take into consideration. The 4 main state taxes that the average joe will run into are: Income Tax, Sales Tax, Gas Tax, and Property Tax. In comparison with Texas (since that seems to be going on in the thread):
Income Tax: Texas has no income tax which is undoubtedly it's biggest selling point. California has many tax brackets ranging from 1% to 13.3%, but most people will never go above the 9.3% bracket since that would require annual income over 254k (345k for couples). Just as an example, a married household with taxable income of 100k would pay about $5.5k in taxes for an income tax rate of 5.5%. When you consider that the median household income in California is about 61k, the average household will be paying an even smaller percentage, probably around 5%.
Sales Tax: California has 7.5% state sales tax vs Texas which has 6.25% state sales tax. Not much to say here - it's a 1.25% edge to Texas. Certain groceries & food products are non-taxable in both states so that's a wash. If say, you spent $1000 a month in discretionary non-grocery spending (12k a year), then being in Texas would only save you $150 in sales tax. Some folks might spend more or less, but either way the difference here is small - only a couple hundred dollars unless you really can afford to splurge.
Gas Tax: Texas has a 20c/gal gas tax vs California which has 42c/gal gas tax. If you use say 20 gallons per week that comes out to about 1040 gallons a year. 22 extra cents per gallon would thus be $228.80. Much like the sales tax, some folks might use more or less gas, but the difference is only a couple hundred dollars.
Property Tax: This is California's biggest advantage - California's property taxes are half that of Texas and Prop 13 caps the increases so even if your home explodes in value you won't get screwed by property taxes.
When you consider the first 3 tax categories, the gas and sales tax savings from being in Texas instead of CA are pretty small, on the order of a few hundred dollars. The largest saving from being in Texas is the income tax which for an average household will probably let them take home roughly 5% more of their income. Add in the sales and gas tax savings of a few hundred dollars. The question then becomes, does the property tax saving in California offset this? It depends on the value of your home of course. If you have a $500k home, then you will save about 5k in property taxes from California, which nearly evens out the previous 3 tax categories in one fell swoop! When you consider that the median home value on CA is 442k, that's not that far off so these kinds of savings are pretty widespread.
Consider that guy with a taxable income of 100k and a 500k house, as well as the discretionary spending and gas usage from earlier. He would save ~5.5k on income tax, $150 on sales tax, and $228.80 on gas tax from being in Texas. He would however, spend 5k more on property tax, so in the end his total tax savings from being in Texas is less than $1000. On the surface it still seems like Texas comes out on top.
However, the key thing that everyone discounts is home price appreciation. Home values in CA increase much faster than in Texas. A $500k home in Texas will likely be worth around $600k after 10 years and you will be taxed ~2% on that 600k. In CA, a $500k home could likely be worth almost $1 million in 10 years and because of Prop 13 you will only be paying 1% on a property tax basis of about 600k. Essentially you will be getting much better value out of your property taxes in CA.
So in the end, the guy in Texas probably ekes out a small edge on day-to-day, month-to-month, and even year-to-year taxes. After all, he saves nearly 1k a year on taxes! Over 10 years he would save about 10k in taxes! However, the irony is that 10 years later, the guy in California will have a net worth hundreds of thousands of dollars more simply due to home price appreciation.
Now the most common retort to this is that you can buy a massive 4000+ sqft house in Texas with a massive lot for 500k whereas in California that amount would only get you a 1500 sqft house with a small lot. All of this is true of course. But it's essentially a trade-off between comfort inside your home (Texas mansions) and comfort outside your home (CA weather) which will largely come down to personal preference. Also, to be fair here, if you are renting then Texas easily wins out since you won't be able to capitalize on property tax savings from CA. However, if you are going to buy a house and are in it for the long haul, then CA beats pretty much every other state in the long run simply due to property tax savings and home price appreciation.
Good analysis, and a much more interesting topic when one moves away from the tired soundbites and peels back the layers a little bit. On the subject of income tax, that becomes a wash between Texas and California if a person's income is largely dependent on Social Security and investments such as Roth IRAs that are exempt from income tax later in life.
And I agree on the personal preference thing when it comes to space. To some people a huge home is a big deal. In that case, I think a person is foolish not to take advantage of more affordable areas such as Texas if they have that option. I happen to be all about the outdoors. As much as I'd like acreage around me, the bugs and humidity would be way too oppressive for me. I'll take the small house and enjoy my yard year-round. But like you said, that's a personal preference where there really should be no wrong answer.
Yes some places have higher property taxes and people are leaving. However some have lower. Where I currently live my property taxes, same value home as I had in CA, is $3000.00 less per year than in CA. MY rate in CA was ... 1.6% and my rate here is ... 1.6% BUT on 1/4 the value of the home not the total value. making my tax in effect 0.4% compared to the CA 1.6%. OH they rise 1 to 2 % a year, kinda like under prop 13.
Now in FL the property tax is higher, but no State taxes on any personal income, so the homeowner comes out equal or better than CA.
Not bashing CA, as Property 13 was a necessary thing when it was voted in and is still an excellent program for everyone.
The difference now is in the assessed value. A $500,000.00 home in a nice area of TX will be higher in taxes, BUT the same home in a desirable area of CA would cost 3 to 4 times as much so the taxes would be very high in CA on that property. My current home would be priced from a low of $750,000.00 in Riverside County to well over $1,500,000.00 in OC. Here under $300,000.00.
People have to chose what they want and can deal with, and some move, some stay. Personal choice and none are making a bad decision, just a personal one.
True, it is a no brainer.. houses are worth less in Texas because salaries are lower, you move to a place where salaries are higher, like California houses cost more. And please tell us about all the "mickey mouse" taxes that California enforces, I live in California and haven't heard about those....
But everyone knows (or should know) the higher salaries in California are rarely commensurate with the cost of living. Pretty much everyone on the CD threads for SD, LA, Bay Area warns people moving into these areas that the higher salaries just don't make up for the higher housing costs.
"Mickey Mouse" tax examples: special assessments that get tacked on for the library, fire district, school district are not uncommon.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
) my personal opinion is that tax based on income or consumption at least gives residents some control over how much tax they pay. Seniors who don't spend much don't pay much sales tax. Income tax is pretty small in CA, and you obtain exemptions for all kinds of things, including number of dependents. Social Security is not subject to CA income tax, so there's another senior benefit. And while people argue sales tax, residents here know that food you buy at the grocery store is not subject to sales tax. You can, in essence, control the amount of tax you pay by controlling your behavior.
