Middle class pays higher tax in Texas than California (Los Angeles: lease, mortgage)

[mlb]

Originally Posted by expatCA

[/b]
The key to being able to do it..

We left Los Angeles because of housing. In those 28 years we bought our first home for $92K ...and 5 years after that moved up to the house we just sold. Bought it for $172 - sold it for close to $400K.

We knew 30 years ago owning a home was the key to our financial success.

We were not wrong.

[njbiodude]

Not totally relevant but I remember making around 25k a year in South Carolina right after college graduation for a few months. I realized my state income tax was 7% on that income. When I accepted a position in California 4 years later for 100k/yr I found my income tax rate was actually below that of SC on 4x the income.

[expatCA]

Originally Posted by mlb

We left Los Angeles because of housing. In those 28 years we bought our first home for $92K ...and 5 years after that moved up to the house we just sold. Bought it for $172 - sold it for close to $400K.

We knew 30 years ago owning a home was the key to our financial success.

We were not wrong.

While it is not the only key, it is definitely important as rent basically throws away any equity that owning a home brings.



I bought my first home outside CA and my second one also. What I made in equity over the years has allowed me to buy the last two homes with cash and some savings. While I could have done so in CA, my wife, a native Californian, did not want to move back, so we did not. I would have, but she comes first.

[Tall Traveler]

Originally Posted by expatCA

But the middle class in TX does better than in CA, so regressive does not seem to be a genuine issue for the residents.



In CA the taxes have a greater effect on the Middle Class because of the overall COL. You can't judge either State by one set of figures.

Yep, great point.

[mlb]

Originally Posted by expatCA

While it is not the only key, it is definitely important as rent basically throws away any equity that owning a home brings.



I bought my first home outside CA and my second one also. What I made in equity over the years has allowed me to buy the last two homes with cash and some savings. While I could have done so in CA, my wife, a native Californian, did not want to move back, so we did not. I would have, but she comes first.

It is important to note that many of our early California friends who did not leave - continue to rent and have never been able to buy a house.

They chastized us for leaving. Now that we are back and have bought a home - they are thinking differently.

[aslowdodge]

Originally Posted by mlb

It is important to note that many of our early California friends who did not leave - continue to rent and have never been able to buy a house.

They chastized us for leaving. Now that we are back and have bought a home - they are thinking differently.

What exactly are they thinking? That they move, make their fortune and can then move back and afford a house? Just wondering.
That’s how it worked for me except I don’t think I will be moving back to California, but you never know.

[nmnita]

Originally Posted by njbiodude

Not totally relevant but I remember making around 25k a year in South Carolina right after college graduation for a few months. I realized my state income tax was 7% on that income. When I accepted a position in California 4 years later for 100k/yr I found my income tax rate was actually below that of SC on 4x the income.

That is a bit hard to believe: are you saying your overall income tax in Ca was less than 7%? But regardless, did you take into consideration other types of taxes like property, gas, car registration, car insurance, etc?

[expatCA]

Originally Posted by mlb

It is important to note that many of our early California friends who did not leave - continue to rent and have never been able to buy a house.

They chastized us for leaving. Now that we are back and have bought a home - they are thinking differently.

Hopefully they have the time and ability to take the steps that will help them. If not, they will be renting from here on out, unless they are waiting on an inheritance someday..

[katygirl68]

Originally Posted by lvmensch

Not sure why you say "argues for". It simply points out taxation in CA is reasonably progressive while in TX and NV it is strongly regressive. I would point out that tax payers in NV pay less taxes than CA or TX at all incomes.

The only message to me is that both TX and NV could produce a whole lot more income if they chose to equalize the load on all the taxpayers. Or they could significantly reduce the load on the poor and middle class by effectively equalizing the tax percentage on all payers.

I think progressive taxation is worse because every time there is a economic contraction, California suffers. It’s boom or bust. And if only a small percentage of the population is paying most of the taxes, then they keep raising taxes. At least in Texas everyone has skin in the game.

[mlb]

Originally Posted by aslowdodge

What exactly are they thinking? That they move, make their fortune and can then move back and afford a house? Just wondering.
That’s how it worked for me except I don’t think I will be moving back to California, but you never know.

They could not think of living outside the bubble. Perfectly good communities - even in California - where housing is more affordable and they chose to rent.

My spouse and I knew that the only way we were going to save for retirement was to control our housing costs - and renting never does that... plus no equity. Not only that - we never paid more than $670 in mortgage payments.... even tho we started off in Utah only making just less than $30K each. Then the economy tanked.

We were still OK. And then I became the sole provider because my husband could not find work that wasn't either commission only or had a decent base.

I retired from my government job making $60K. We made the choice to save 30% of our income over the years and that's how we had a decent portfolio upon retirement.

I just think people are short-sighted and don't see the consequences of their inaction. We left and protected ourselves.