Californians Are Dreaming of Lower Taxes: High Earners Leaving State | Hacker News Reader

Californians Are Dreaming of Lower Taxes: High Earners Leaving State

bloomberg.com

13 pointsLastNevadan15 comments

I've never understood the frame where people are "high earners" as an intrinsic trait and then choose (whether as a matter of luxury consumption, ideology, or tax avoidance) to live in California or not. Most of us are high earners because of, and contingent on, showing up to California offices.

I don't think the article necessarily does that. It just says that those who earn a lot in California seem to want to leave. Maybe they'll make less in their new state. It doesn't address that. Of course, as cali taxes go up, less income in a cheaper, lower tax burden state, means that the choice is now between two similar levels of quality of life, so it wouldn't be hard to come up with a causal model for the migration even if high earner was not an intrinsic trait.

>two similar levels of quality of life

I doubt it. California's culture, climate and geography are a huge part of the quality of life and are not easily replicated in the "cheaper, lower tax burden state." Try spending a few winters in South Dakota.

If I really had to live in the USA (which I really don't want to because of crime levels, food quality, society polarisation, kids mental health), I think Texas has the best compromise in terms of low income taxes and climate.

Still, there are countries with better climate and taxes in the old high-tax Europe.

We'll see for how long, and which part of the world to pick next.

Nah. I lived in Houston for several years and I missed everything in California. Austin might be better, but it is the exception to Texas and not the rule.

Texas is damn hot in the summers and is only going to get hotter

If your strawman argument were true, then California's 68B deficit should solve itself when those that fled end up returning.

I wasn't making a strawman argument. I was simply pointing out that the trade-off of moving to a lower tax state from California is more than just a cost of living trade-off.

I mean, I left California for the PNW and the tax burden is substantially less. Washington state has no income tax, and a much better quality of life than most places in California.

I grew up in California; I love California culture... truly. However, California in 2022 is a sad shadow of the 90s. I know everyone idolizes their childhood, but I firmly believe this to be true. The pioneering, responsible, but independent spirit of California is gone, replaced by a puritanical authoritarian regime. The PNW has its own issues but the governments up here are just not as competent as California.

Also, other parts of the country are nice and people there (or even those who live in California) may not really care for 'California culture.'. People are different, and this new sort of attitude that 'our way is best' is exactly the kind of puritanical authoritarianism that has somehow made its way into California. It used to be very 'different strokes for different folks'. Now it's definitely my way or the highway.

If you can command a high salary in California you can probably command a lower salary in Texas and an even lower salary in Europe. For whatever region you move to, you are still likely going to be a high earner relative to where you are.

A lot of people work online these days.

I haven't worked in an office since 2015 and several of my friends went fully remote (either as employees or entrepreneurial) in the late aughts.

Not to mention people have always complained about taxes in california. Every decade or two, it's the same story about sf, la or california imploding, but nothing happens.

As long as california isn't physically moved to the arctic, the colleges leave, tech industry leaves, hollywood leaves, etc, people, especially those who want high incomes, are going to be drawn to california.

California has the weather, landmass, pacific ocean, colleges, industries ( from tech to media to agriculture ), etc... Regardless, in 10 or 20 years, no doubt we'll be talking about the decline of california once again.

California will always be a place for people with millions in inherited or appreciated real estate wealth to congregate and enjoy the natural amenities. But people who work for a living - even at very high wages - will only ever be paying a higher share of take-home for worse housing. California doesn’t want us, and conceivably it’ll have its way at some point.

Here's the study this article is based on: https://www.nber.org/system/files/working_papers/w26349/w263...

Edited to include to a free link to the PDF

>ATRA also implemented an additional Medicare tax on employees of 0.9 percentage points on incomes over $200,000 for single taxpayers and incomes over $250,000 for married couples. This is in addition to the Medicare portion of the FICA tax, which is 1.45% for employers and 1.45% for employees. The total Medicare tax therefore became 3.8%, of which 2.35% is statutorily paid by the employee. A self-employed individual would pay the entire 3.8%.

This error-filled paragraph alone makes me question the reliability of the results. First mistake: the additional Medicare tax (and Net Investment Income tax) were not part of ATRA, they were part of the Affordable Care Act (aka Obamacare) and took effect in the same year as ATRA, but otherwise completely unrelated.

Second, the article continually uses "income" as a misleading synonym for "taxable income", which is significantly different from AGI in all cases.

Third, it is false that "The total Medicare tax therefore became 3.8%" -- no, only the marginal rate for high earners.

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