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Comment by seibelj | Hacker News Reader

High-taxation states that rely on their highest-income citizens to pay for massive pension obligations and bureaucracy are in for a rude awakening. Short of making it illegal to move out-of-state, I don't see how they can stop this from blowing a hole in their finances. I consider this a good thing - it (hopefully) will enforce some fiscal discipline - and the fallout will be interesting to watch.

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NYC already has arrangements for this. Since a lot of people live in NJ and CT, they have city taxes that apply to people working there and living in other states. I believe most states with high tech industry will do just that. It is not a difficult problem to solve like some people imagine.

The city taxes are based upon the number of days you spend in NYC above a minimum (14-days). If you work from home from a different city / state, you won't pay city tax if you never travel to NYC.

This is just a detail. The city creates the tax so they can change it any way they want.

> This is just a detail. The city creates the tax so they can change it any way they want.

The majority of large companies are Delaware C-corps and they pay the State-specific taxes for each employee's home state and the employee's primary office location. There's no way that NYC could tax all of a company's worldwide employees who never set foot in NYC just because it has an office in NYC. Attempting or merely suggesting it would have massive consequences.

If they're going to go full cash-grab, they might as well figure out the property values that align with billionaires and structure property taxes that specifically target them. For example Bezos has a couple apartments in NYC[1] bought for about $80M. They could put a one-time %100000 property tax and demand he pay them $80B.

[1]: https://www.businessinsider.com/jeff-bezos-apartments-new-yo...

You'll still have to pay NY state taxes if you're a telecommuter, even if you do not set foot in the state.

If all the employees of a company based in NY work remotely, wouldn't the company just relocate somewhere else to make it cheaper for all the remote employees since there's no longer a need to have a HQ there?

This is a big IF. Nobody is saying that HQs will stop existing, only that they will have more remote workers.

It depends - even for WFH or agile working here in the UK, usually you have a "home base" in your contract where legally they can force you to work from should push come to shove. I'd imagine there's something similar in the US which gives them a reasonable argument to still tax those who should be in the city?

I guess a few companies will open up satellite offices in places amenable to remote works in that instance.

This is not correct. Non NYC residents with NYS source income do not pay NYC (resident) tax, But they do pay NYS tax.

See https://www1.nyc.gov/site/finance/taxes/personal-income-tax-...

I live in NJ and work in NYC. I don't need to pay the city tax. I only have to pay the state tax. Your understanding of this is inaccurate.

This assumes that the states that fund pensions and "bureaucracy" (which is a term that often is used for gov spending regardless of efficiency) are not desirable places to live in general (sometimes as a result of spending). As a separate point, California doesn't even hit the top 20 states by per capita spending. [1]

[1] https://ballotpedia.org/Total_state_government_expenditures

Personally, I think people that move to lower-taxation states are going to be in for a rude awakening when they realize how poorly funded local infrastructure is and how much they took for granted.

Speaking as someone that's lived all across the US, I don't think people understand how dire even the major non-coastal cities can be.

While I understand this was most likely posted in a fit of brief anger, the non-coastal areas are not a desolate wasteland.

If you rely on public transit, biking or walking then they absolutely are a desolate wasteland.

If you're relying on raising a family, property might be cheaper but often the best school, universities and opportunities are located in or close to the major coastal cities.

There might be a few 'tech oasis's' (such as Austin) but if you move or live close to those cities you'll find that CoL quickly rises with fewer benefits than living near the coast.

The “best schools” have been exposed for the scam they are under the pandemic. The schools can’t open and are providing the next few semesters of lectures through Zoom while trying to keep their prices. In turn, students are suing for lower tuition. I hope these institutions crash as they only serve as gatekeepers of career progress favoring those with money. Google’s employee performance indicators show that there is no correlation between the prestige of the school an employee graduated from and the success of the employee at the company. That lead them to ditch the college degree requirements for good.

SF's roads and highways are abysmal. I've had smoother rides on graded dirt roads. Plenty of places are doing just fine, and you don't have to worry about catching covid while trapped in a sardine can under the bay.

The two most bike-friendly cities in the US (Minneapolis and Portland) are not on or near the coast.

Any "best schools" ranking will show you that at least 7 out of the first 10 districts are not in coastal cities.

I'm not sure where you've lived before or if you have family or kids to have researched this matter seriously but the US offers a lot of choice depending on where you are in life and how you want to live it.

Discarding half the country as a "desolate wasteland" can only narrow your options in life.

Interesting. Can you give some examples of things you take for granted in a costal city that you don't get in a major non-coastal one?

what does "local infrastructure" mean here? because I know schools, for instance, are way worse in coastal cities with high taxes than, say, the midwest.

This is funny because I have found this to be the exact opposite. Utah, Florida, Texas has better infrastructure than California, New York, Massachusetts. Are some low-tax states shitholes? Yes, but there are definitely low-taxation states that are well run. It really has nothing to do with the rate of taxation (beyond a certain point), it's more about the quality of government and the priorities of where the spending should go.

You'd have to describe where in Texas you're referring to and what you mean by infrastructure, because Austin is embarrassingly bad when it comes to public transit and general walkability and Houston faces similar growing pains due to being incredibly underfunded and our state government being a shitshow.

I mean, doesn't California tax you even if you live somewhere else but work in California?

If you physically work in California yes. I don't know what happens if you work for a company whose HQ is in California but you're physically in a different state.

Facebook and Google, among others, have offices outside of CA. Employees of those offices do not pay CA income tax. (They do however, for their respective states)

To expand on this:

Several of my coworkers who moved from the Bay Area still pay CA taxes for stocks that were granted before they moved, which means potentially 4 years of paying taxes for two separate states.

On the plus side, their CA tax bracket is much lower, since they don't have salary / bonus / new stock grants.

Companies setup subsidiary corporations in states employees are in if the tax situation makes sense.

This is especially true if you use an outsourced HR company like TriNet for payroll, which many startups do.

I work remotely for a company based in California. I pay no California taxes. We also have offices in other cites around the US and the world and have had remote people as a permanent feature for a while.

Would be interesting to hear the answer if anyone knows it.

There are caveats as mentioned in this thread, but in general, no you do not pay CA taxes if you live in another state and your company's HQ is in CA.

It depends on what state you're a resident of and where you do your work.

I live in MA and, when I worked in NH, I had to pay MA income taxes because I live here even though NH has no state income tax. Now I work for a company with offices in MA (even though that's not where the official HQ is) so I still pay MA taxes; doesn't matter if I'm remote or not. Were I to move to NH and work remotely, my understanding is I would then not pay state income tax (although I would if I were assigned to an MA office).

People will just transfer to satellite offices / companies will establish a presence outside of California. I'm sure at some point the CA legislature will attempt to tax any "work that has a material benefit to a California business", but that is a shaky legal argument.

After MD v Wynne, I think they'd have to give tax credits to income tax paid in other states if they tried that.

Yup, this is what happened to me this tax year, but only for stock options, not for regular income.

I work for a CA company, but remotely from the midwest (home office), and I pay CA taxes for the stock vests I got from my company last year (because I lived in CA when the grant occurred.) But I also paid taxes in my home state for the same stock. I just filed an "Other State Tax Credit" in CA (form 540 Schedule S), which effectively made CA give me a refund equal to the amount I paid in my home state. Same thing would happen if my regular salary was taxed.

It effectively means you pay the higher tax of the two states: if the state you live in has higher taxes (NY for instance), CA would have to essentially refund you all the taxes you paid; whereas if you live in a cheaper state (more likely), you effectively pay a CA income tax rate overall, since CA is keeping the remainder after refunding you for the other state.

Tech companies are Deleware businesses, though. You'd have to do something even crazier, like "a business with a significant California business."

California will not tax you if you live out of state, but if you have anything registered in CA, like you have a car registered in CA, or you own property in CA, like are a landlord, then CA will want you to pay taxes as if you live there, because the state can't identify if you live there or not.

Wealth transfer/vacancy taxes are one proposed solution. There's a guy running for mayor in Berkeley that wants to impose a wealth tax for example, and his scheme to prevent people from moving is to charge massive exit taxes to get their money anyway. Which I doubt would hold muster in any court, but who knows.

No idea on the specifics.

I just hope the fallout doesn’t “fall out” before I get a chance to move first!

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