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Comment by PopAlongKid | Hacker News Reader

This article is pretty vague, and in fact down right sloppy when it comes to making numeric comparisons. It casually mixes up taxable income with gross income, which are two significantly different things (tax rates only apply to taxable income). Then it talks about population losses from cities, without taking into account those who remained in the same state, or losses due to coronavirus fatalities. It casually tosses out claims like "New York, where the cost of living is exorbitant" yet nowhere does the article compare cost of living in New York state vs other states, since the article is actually about taxes.

There's more, but I'll leave with this contra-article. California is indeed a high tax state for the very high income people, but it's actually very reasonable for middle and lower class income earners.

"Yes, Texans actually pay more in taxes than Californians do"

https://www.sfgate.com/news/houston-texas/article/texans-pay...

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Yeah, the numbers are extremely sloppy. Even for the basics, like coming up with the marginal tax rate in NY, he uses the top federal, state, and city income tax rates and adds the social security tax to that.

But the top federal tax bracket starts at $540k and the Social Security tax cuts out at $142k, so if you're paying one on marginal income, you're not paying the other.

That's not just sloppy, it's incorrect!

The top-line claim of the author is flat-out demonstrably wrong.

I agree they shouldn't have put the 53% marginal claim right next to the social security point, as the max-marginal people will be well past the cap, but the 53% max marginal rate might still be true?

37% federal + 1.45% FICA (medicare) + 0.9% medicare surtax + 10.3% NY state + 3.8% NYC = 53.4+%

but I don't work in NYC.

BTW, between $1M and $1.1M, NYS tax rates switch to flat, not marginal, and apply to the entire income.

He does use or mention a lower effective tax rate. Even though he points out a 53% on-paper tax rate, he mentions 42% as the effective tax rate in the next paragraph. This does seem closer to the truth.

He also specifically says that case-by-case numbers are more complicated and vary, so it's not fair to argue that the numbers are extremely sloppy. He has made an attempt to use well-researched average numbers that appear to rely on actual rates people pay, not the theoretical marginal rates. Mentioning the marginal rates is a rhetorical device he uses, not the rate he uses to illustrate the scenarios.

Exactly. You can't compare taxes across states if you're only including income taxes but excluding property taxes. Texas property taxes are ~2.5% for me (and they adjust annually), while CA property taxes are (famously) capped at 1% of the purchase price.

Adjusted for current values two properties in different states often end up paying similar amounts of tax. It’s just part of the entire picture.

Don't know why you are being downvoted.

CA: $788,679 [0] * 0.73% [1] = $5757.3567

TX: $315,235 [2] * 1.69% [3] = $5327.4715.

[0]: https://www.zillow.com/ca/home-values/

[1]: https://smartasset.com/taxes/california-property-tax-calcula....

[2]: https://www.zillow.com/tx/home-values/

[3]: https://smartasset.com/taxes/texas-property-tax-calculator#:....

Zillow home value index is not accurate at all in my experience. And Texas does not require property sale prices to be public, unlike most other states.

Presenting a single home index value for all of California or all of Texas is near pointless.

Good luck finding a house in Austin that's 315k paying 1.69% in property taxes.

Ok, lets compare SF and Austin then:

San Fransisco: $1,576,808 [0] * 1.18248499% [1] = $18,645.5179

Austin: $661,337 [2] * 2.2267% [3] = $14,725.991

[0]: https://www.zillow.com/san-francisco-ca/home-values/

[1]: https://sftreasurer.org/property/secured-property-taxes

[2]: https://www.zillow.com/austin-tx/home-values/

[3]: https://www.homecity.com/blog/austin-property-tax/

I do not understand how this can be true, given the vast differences in government expenditures across the nation, especially due to things like water and energy costs, maintenance costs from freeze/thaw cycles, and the elephant in the room, underfunded government retiree benefits such as defined benefit pensions and retiree healthcare.

Also, I would much rather pay a higher nominal property tax because my property is worth more than pay a higher nominal property tax because the property tax rate is higher.

The government spending grows to fit available revenues, and available revenues grow to fit whatever the taxpayers can still bear.

>The government spending grows to fit available revenues

This is trivial from the fact that the government is not a for profit entity.

>and available revenues grow to fit whatever the taxpayers can still bear

This is also trivial because taxpayers and voters sufficiently overlap.

However, some governments have borrowed more from the future than other governments, and just like a business with more debt service has less to spend on other expenses and/or has less profit, a government with more debt service has to spend less on infrastructure/services and/or has to increase taxes.

> This is trivial from the fact that the government is not a for profit entity.

This is not so. Government could use the surplus revenues to pay off debt early, or to reduce taxes. It almost never does these things.

Oregon does with the infamous kicker rebate.

But my point is more that governments (ideally) collect taxes based on projected spending (a budget), so of course spending will roughly match up with collection. Although, in reality, governments spend far more than they collect via off the books retirement benefits for government employees.

> Oregon does with the infamous kicker rebate.

Haven’t heard about it before, but this sounds great, not sure why it’s infamous. Sadly, though, things like that overall very rare, hence why I said “almost never”.

> But my point is more that governments (ideally) collect taxes based on projected spending (a budget), so of course spending will roughly match up with collection.

I think it’s the other way around: the budget is planned around expected tax revenues, instead of tax revenues being planned around budget. This is actually a huge difference: when there is a revenue windfall, extra funds are spent on pork or vanity projects, instead of returning them to people who they were taken from.

As an Oregonian, I think the reason it’s infamous is that Oregon schools are terrible and many people blame the kicker for taking surplus budget that could have been spent on schools and giving it back to the taxpayers instead. It also gets a fair amount of criticism for proportionally distributing funds based on how much a person paid in taxes, so the wealthiest get the most money back.

Can’t say how much the kicker really does impact these things, but I can say that when you compare state funded resources between California, Washington and Oregon, Oregon’s usually come out looking worse. For example, if you take a road trip up i5 from Los Angeles to Seattle, you’ll notice that the rest stops in Oregon are far worse than those in California or Washington. It does seem that there’s an austerity in Oregon absent in those two states, and I can’t help but wonder if it’s imposed by the requirement to send back the surplus.

There is basically no significant correlation between school spending and performance. If anything, worse performing schools tend to be better funded on average. Thus, there is no reason to expect that increased school funding will translate to better performance. I hope that it makes you feel slightly better about the surplus tax not going to schools.

As for austerity, given the between-state variation, what money is spent on is way more important than how much of it is available. As it turns out, Oregon actually rakes in more money (per capita) in state and local taxes than Washington, so one should rather expect Washington to be the austere one. In fact, Oregon could send every resident a check for $1k every year, and still have 10% more money available per capita than Washington. That’s why I’m rather skeptical about governments claiming to need more money in order for X not to suck: first I want to hear an answer to “why X sucks less in state Y, which spends less money on X than you?”.

That would result in deflation and deflation would require negative interest rates. Germany had a debt brake before the pandemic and their interest rates were the lowest and even negative on government bonds. The same is true of other countries like Switzerland.

If you want your government to stop the endless debt expansion you're going to need negative interest rates.

~2.8% for me! And that pie gets bigger every year, even with appraisal protests, my property value is outpacing inflation (9% gains per year). Income taxes are relatively fixed to your salary at least. My property tax (and sales tax) bill grows annually.

That article isn't too convincing since they claim that most of the reason for Texas having a higher effective rate for lower income is sales and excise tax - but the sales tax is 9% in California and 6.25% in TX (~8% with local taxes), not to mention gasoline taxes, etc.

Property taxes are higher, but housing prices are lower in TX than CA. From what I've seen they are a bit of a wash (tax rate is double, but housing prices are 50% or less).

And in the methodology section it says "The report also includes the effect of indirect consumption taxes: the sales and excise taxes that are paid initially by businesses rather than individuals". So it looks like they assumed those taxes are passed through to consumers when in fact they aren't, at least not 100%.

They also exclude all tax payers over 65.

"Property taxes are higher, but housing prices are lower in TX than CA. From what I've seen they are a bit of a wash (tax rate is double, but housing prices are 50% or less)."

This was true years ago, but the cost of housing in Frisco TX and San Diego CA are about the same now. If anything, San Diego may have an edge because it has many older, smaller properties that keep the overall cost down compared to the newly built up mcmansion land of Frisco.

> but the cost of housing in Frisco TX and San Diego CA are about the same now.

I do not understand this. Do you mean cost of housing excluding purchase price?

The cheapest 4BR/3BA in or around San Diego is $1.4M, and there is only 1. Property tax will be at least $14k per year.

https://redf.in/s4hVXR

Frisco, TX, on the other hand has a ton of 4BR/3BA, and this is a comparable new construction for $1.4M. 4x the lot size, 2.5x the interior space.

https://redf.in/hwqzX8

The numbers are more than sloppy, they are (technically) flat-out wrong. New York State imposes income tax on out-of-state workers based on a convenience of the employer test. (The law was passed when workers started leaving NYC for nearby states when people discovered they could work from home before the pandemic.) So in many cases, even if you don't work in New York, you still get to pay New York State income tax, unless you check a bunch of (rather arbitrary) boxes.

The law itself, IMO, should be struck down by the interstate commerce clause. Additionally, it's the wrong fix: if New York wants to retain citizens, they should reduce the tax burden to compete with neighboring states, not attempt to legally overreach and clutch money as hard as they can.

> should be struck down by the interstate commerce clause

I’m not sure I understand why you suggest the interstate commerce clause. But regardless, didn’t the Supreme Court refuse to take up the case earlier this year when New Hampshire unsuccessfully sued Massachusetts over this same issue?

It seems that the concept is allowable, at least according to current law.

That contra articles is very deceiving. The cited data most certainly do not say that “Texans actually pay more in taxes than Californians do”. This is very much false, so false and contrary to common knowledge in fact that you should have went back and asked yourself “wait, is it actually true, or is someone trying to pull a fast one on me?”.

Here is the crux of the issue: the graphs and the source do not say that the non-wealthy Texans actually pay more money in taxes. Instead, they contribute higher share of total tax revenue. This is not the same thing as actually paying more in taxes.

Imagine a state where every single residents pays exactly one penny in taxes. In that state, bottom 20% pay exactly 20% of the tax revenue, and top 1% pay only 1% of the tax revenue. By the article’s logic, in that state the non-wealthy residents would pay even more taxes than the ones in California. It is, of course, absurd.

You cannot look only at the shares in the revenues, you need to also look at the size of the revenues to judge. As it turns out, Texas pulls in around $8.6k per capita in state and local taxes, compared to California’s $13k. That means that even though middle 60% of Texans contribute 10% of the revenues, compared to 9% of revenues contributed by middle 60% of Californians, they actually pay a third less in taxes in actual dollars.

In short, the article is pure misinformation, deceiving people for political gain, typical for today’s media. Where are the fact checkers?

That article and the OP are an example of gaslighting and motivated reasoning. "This claim is sloppy, but not this other one that confirms my bias".

But really both are sloppy.

It's even worse than that, nearly the entire difference cited is based on property taxes but they use a property for comparison that doesn't exist in California, but does in Texas. As a percentage of home value, property taxes /are/ higher in Texas, but home values are also massively lower (1/3rd or less) in almost all of the state, which means that /actual taxes paid/ for property tax are nearly identical to sometimes less in Texas, /and/ because housing is cheaper, it's more affordable to actually own a home instead of renting forever at lower income quintiles.

Anyone who actually looked at the data and concluded that living in California instead of Texas was a better financial deal for someone who is not a high income earner is either stupid or lying.

Definitely true. As a tax lawyer I've met plenty of Californians moving back to CA from TX because the promised land of tax salvation was actually more expensive, and plenty of Texans who moved to California excepting tax shock and were pleasantly surprised when their total tax bills were several thousands lower in CA.

In addition to paying more in taxes in TX, they got less in government services for the taxes they did pay, insanely invasive government, and had to pay more for generally everything except beef (which is great if you love steak).

> and plenty of Texans who moved to California excepting tax shock and were pleasantly surprised when their total tax bills were several thousands lower in CA.

Can you explain to me how is this possible? Like, an realistic example scenario.

Housing in Austin is the same price as it is in the LA area but our property taxes are way lower in CA thanks to Prop 13, so even with state income tax you come out ahead in SoCal. This is true even with the SALT cap, though single income earners will not see as much of a benefit moving to CA.

Also, the FUD about CA income taxes always ignores the calculation of tax liabilities in a progressive scheme, so the tax burden is always wildly overstated.

OTOH, if you're willing to move to less nice parts of TX you will save money on taxes compared to CA. But you'll find out pretty quick why housing is cheaper there.

> Here is the crux of the issue: the graphs and the source do not say that the non-wealthy Texans actually pay more money in taxes. Instead, they contribute higher share of total tax revenue.

Did we read the same article? Because that isn’t what it said, look at the graph again:

https://i.redd.it/7pdcf4q65kg91.jpg

Subtitle: total state and local taxes as a share of family income by income group

I'm pretty jealous of prop 13, ever increasing property taxes is brutal.

While pay taxes is a pain, having a society where people pay different property tax rates creates many problems. Imagine not wanting to move near your new job because your monthly property tax bill would double. Many of California's problems are related to prop 13. At least they recently removed the provision that you could pass your low property taxes down to your children and grand children. We were building up a nice landed aristocracy. Corporations, of course, can live for a very long time and are also covered by prop 13.

I get, maybe somewhere between. I see your nj username, you probably know what its like for people once retired paying $20k for property taxes, its a big temptation to leave.

> Imagine not wanting to move near your new job because your monthly property tax bill would double.

Imagine having to move because your monthly property tax doubled.

Our property taxes are assessed every three years, and the price of my home has gone up significantly in the four years since I bought it. These are unrealized gains; my income has not gone up a penny. But, when the assessment is made, my property taxes will skyrocket.

Imagine having to pay more for bread. Or milk. Or anything else.

It is simply inflation. If we accept it in all other places of life, and renters are expected to accept it, why should land owners not be expected to accept it?

If your income has not gone up in 3 years, and the purchasing power of the currency you earn income in has gone down, then you simply have to accept you will be able to purchase less. Or figure out a way to make your income go up.

Also, participate in city/county/state governments and elections to make sure current leaders are limiting excessive spending from future taxpayers’.

The difference with property is that its not a consumable. In an ideal world you pay off your mortgage then you dont have to worry about housing costs much, allowing you to budget on real expenses for things you consume. If you buy a house and then the area gets more popular and expensive should you pay more even though its the same house? This is especially important for retirees. Worse if you lose you job you stop paying income tax but you have to pay property tax still. I get it if you're a regular worker paying rent its a different world but hopefully one day you'll understand.

> I get it if you're a regular worker paying rent its a different world but hopefully one day you'll understand.

Understand what? Why would I think certain portions of the population should be exempt from certain types of inflation?

Life is consumable. The utilities, streets, city hall workers, inspectors, everything that makes the world go round. Everything decays and needs to be brought back to order, over and over again.

If the argument is that poorer people should get assistance to not be so poor (including retired people), then sure, give them cash. But I do not see why a retiree should get any more consideration for where to live than a poorer immigrant family who has not had the opportunity to save a down payment and has to rent.

I'm not sure what we're arguing about here. I dont live in CA, I said I was jealous of Prop 13. I think there are benefits to capping property tax rises. Only a quarter of households rent and I support any measure to help everyone buy.

I understand it is a big problem. It would be great if when property values shoot up then the rate would be reduced, keeping the payment about the same. Have the revenue go up a little over time.

Property taxes mostly pay for schools. I read a story about funding schools in Utah. The way it was done in this district was that the district was responsible and could be trusted not to waste money. They figured out what the budget they needed each year, it was approved, and then the tax rate was set to cover the budget. This would be a great situation to live in because when property values go up a lot over a few years but the cost to run the schools don't go up much, the school district lowers the tax rate instead of trying to find ways to spend all the extra money they are getting.

Prop 13 is rent control for property owners. Change my mind.

Probably, I said I was jealous not that it was great policy.

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