<p>Actually, I do know what you mean, Bay. I lived in NorCal for decades, my family’s been in SoCal since the late 40s. I’m in the LA area several times a year. I’ve seen the growing “uglization” of Los Angeles, the loss of orange groves and orchards in favor of housing tracks and freeways. My family’s experienced firsthand the decline in public schools. So there’s no doubt that some of the glitter is gone from the golden state. </p>
<p>The uglier truth is THAT’S THE CASE WITH US AS A WHOLE. We’re in decline. It’s just that California, with its huge resources and yes, global economic importance, still has more on the ball than huge swatches of the US. As someone else on this thread says, where goes California, goes the rest of America.</p>
<p>" Originally Posted by gosmom
$250K does not go far in many areas of CA.
Totally ridiculous. Many, many people in California live on 1/10th that amount. They just don’t live lavish lifestyles with BMWs, timeshares in Tahoe and $50,000 college bills."</p>
<p>I hope this doesn’t make me unpopular, but there is a long way between living on 1/10th of 250,000 and lavish lifestyles with BMW’s, timeshares and $50,000 college bills. California is huge, but I think the majority of the population live in incorporated areas, and near places with em[employment. If we are talking within commuting distance of say Sacramento, Stockton, Fresno, and a few other ares with reasonable cost of living but sad employment rates, how many are living on 25K? I can promise you they won’t be owning hoimes, or at least not for long.</p>
<p>No way. Absolutely incorrect. A resident of Washington state does not pay California state income taxes if his/her company has HQ & offices in California. (Filing the California return is really easy. All income goes into the other state column. Zero income goes into the California column. Zero income times California’s tax rate is still zero.</p>
<p>Why don’t you tell me why you think california is so important, other than the idea that some people who do not have to pay income taxes want to move there, and then maybe I will see your point.</p>
<p>At this point, you just seem kind of nuttily aggressive to me.</p>
<p>As good as prop 30 might be in the long run, California taxes capital gains as incomes and is affected strongly by the shenanigans in Washington and the stock market. Slumping shares will hit California hard.</p>
<p>Non-residents are only subject to tax on earned income within the non-resident State that wants to tax them. That could be wages earned in the State, rental income or business income. They are not taxed on the “unearned income” such as interest and dividends. States can take into account all income to determine which tax bracket the earned income would be subject to.</p>
<p>High income earners usually keep detailed records of their work schedule so they can allocate income to the appropriate place. Their home State taxes 100% of their income no matter where it was earned including investment income but provide a credit for taxes they paid to other States so that there is not double taxation.
Moving to a no income tax State means they limit tax on investment income. We have that issue in NJ where many high earners claim to reside in Florida. They pay tax on what they make in NJ but not investments. Many of them we find still have a tax domicile in NJ and we end up getting the tax on the investments also.</p>
<p>Not knocking CA. Beautiful state and it has a lot going for it. “Go west” is still valid in terms of some very lucrative jobs out there. I have no idea how much in additional tax revenue CA expects to net with their “millionaire tax”, nor do I know how many multi millionaires will find it easy to move residency and do so to save a bundle. But those with incomes up in those stratospheric amounts, are not going have much trouble making the move. Those at the lower end of the affected spectrum will likely find the benefits of staying, with job opportunities and pay, are advantageous even with the additional tax. But the final reckoning will take time. </p>
<p>I know Californians who have moved to Texas and Arizona and New Mexico when they retired or when they could work from home, didn’thave to be on site to save money, and these are not ueber wealthy folks. The advantage was enough for them to make the move and give up the other benefits of living in California. I have two friends who commute from those other states for when they have to be on site. The housing differential alone makes it worth it, never mind taxes. </p>
<p>I’m thinking of moving across the border to Connecticut due to real estate, taxes, sales and state taxes a lesser consideration. But it’s there too. DOn’t have to pay taxes when buying from Amazon, for example in CT. Do in NY.</p>
<p>But, I’m not trashing california. I’m just saying that I don’t think it’s important.</p>
<p>That would be like saying someone who wasn’t a US citizen was ‘trashing’ it by saying they didn’t find it important in any meaningful way.</p>
<p>I mean, really, the interesting thing here is the high income inequality in california, which explains why they would adopt these particular tax policies. That makes a lot of sense to me. California has both the 10th richest population in the US AND the 18th poorest. So, I could see why it would be interested in income redistribution.</p>
<p>But, I’m not trashing california. I’ve been there many times on business. I like san francisco and find LA to be the empitome of soul-less-ness.</p>
<p>Every time we have this conversation I wonder if some of us are comparing apples to oranges. Some of us are talking about billionaires, golf players, and folks living in San Diego. When I think of folks making $250K, I’m thinking an internist married to a teacher in Stockton, or a couple of lawyers in Sacramento. Most of it is not. I’m reading this and hoping that if I pay enough taxes, I can keep my job, because it’s paid for by taxes. I am hoping the job doesn’t end a quarter before the taxes do. </p>
<p>Those of you using the expression “rich people living in California” or “1 percent”; what image does that bring up for you?</p>
<p>I must admit to not knowing what makes CA so important nowadays in comparison to the rest of the country other than its sheer size, and I live here! I feel like we are pretty much ignored by Washington. Our schools are not great. We have relatively high joblessness, poverty rates. We produce a lot of the country’s agricultural products, so I guess that makes us important. Yes, entertainment and silicon valley are here, but couldn’t they be located elsewhere and flourish equally or better? Or does CA deserve special credit for their existence somehow?</p>
<p>Shrinkrap, I’m looking at both. My brother and SIL live out theree and they are in the lower end of the “rich” and live there to be making that kind of money as well as liking the state (my SIL anyways). Then there are the celebrities making the megabucks that can up and leave if they decide the increase makes no sense to have their domicile be CA. Those in the former category are not going to be able to up and move very easily, the latter could do so without any trouble. I don’t know where the bulk of the wealth in that over $250K income category is focused. Are there far more in the lower end so that even if a large number of those in the upper end move, it still is going to be a great increase in revenue for the state? I simply do not know. Does anyone here? </p>
<p>I’ve read arguments against Obama’s federal tax increase ont the wealthy that pretty much say what I have about the matter. On a personal basis, I can tell you that those who live on the lower end of the high income scale who get reductions in pay due to increased taxes, it means making adjustments in the way they live. Since they are stuck with the fixed costs of house, utilities, kid’s schools, and other things that are a pain and take time and expense to make the cuts, they tighten the belt in spending. Buy a car every 5 years instead of 3, and buy it used instead of new. Doesn’t take many locals doing that to hurt a local car dealership. Let the cleaning lady and lawn guy go and get an general service to do it once a month instead of twice or once a week. The fat that is cut comes off of other people’s income and those folks can quickly be spun into the jobless or in real trouble to make ends meet. Oh yes, and just reduce those charitable contributions. Those who are spending a lot of extra money have a lot of places where they can cut, and I can see how that may end up bringing less money than more into an economy. </p>
<p>So yes, it is important to differentiate. I will also say that my brother and his family do not live what most people would consider a high flying life style. They live in small 3 bedroom ranch house, have no cleaning service or yard service and my brother does most home repairs himself. They hardly ever shop either. Their kids have less stuff than my cousins’ do, and they are definitely middle income unlike my brother who falls in the upper income range.</p>
<p>Want to add, that to them, private school is a necessity. They looked at some public schools, looked at each other and that is where they spend a good portion of their money. The kids where all second hand clothes and pack their lunches but they both go to an excellent private school.</p>
<p>Are some people going to have to reduce their retirement saving? If you own a small business, and you have to make quarterly payments, it seems to me the tax payments come first, and THEN if you have some to sock away for retirement, you do. At least that’s how I roll.</p>
<p>This is off the cuff, no time to google and research, but I would venture to guess that California has more experience and success at educating first generation Americans than any other state. So while entertainment, Silicon Valley, fruits & nuts (and our most valuable crop, marijuana) make us one of the largest economies in the world, our real importance is the investment in human capital. Look at demographic projections and ask about the future of our country and where education efforts should be focused. The argument of whether we should do this and who should pay for it leads to an infinite loop of disagreement, but the reality is that the California education system has been an engine of transformation for many who would otherwise languish in menial labor. I think that’s pretty special.</p>