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New Yorkers Trying to Flee High State Taxes Find Moving Isn’t So Easy

120 points by kimsk112 8y ago

Latteland 8y ago
what if two higher tax states both claim they are your home state because they want to fight over your taxes. this must happen. that's different than moving 'mostly' to a lower tax state. and then what's the threshold for ny claiming you moved there? what a mess.
- joering2 8y ago
  It happened to my buddy who happens to be millionaire and flies every few weeks cali versus new york. Two years ago state of california sued him for non payment of taxes. It went down to literally receipts from gas station making difference proving he spent over 183 days in new york versus cali. intresting - credit card purchases were not admitted because state tried to prove he used proxy (he does) so he could be in any state when purchasing off of Amazon. He won and gov appealed Then cali went after new york asking for all the evidence of his taxes knowing new york wont comply. For over year both states fight with each other with my friend being literally non-involved. Eventually cali dropped the suit some 16 months after filing appeal.
  - everdev 8y ago
    This is insane. Why don't we just pay the federal government the entirety of our tax obligation and have them partition it out to the states? I'd love to spend less than half the year in any one state or be completely state-less.
    - efnx 8y ago
      That sounds dangerous.
      - idiocratic 8y ago
        Dangerous in what way? I'm European and baffled by this sentence.
        cylinder 8y ago
        Americans are deathly afraid of government. It's not just the lower or extreme classes. As you can see it's pervasive even on HN. The irony is that Europe, Australia etc are much less "dangerous" than the US
        isostatic 8y ago
        Have you seen who they elect?
        deleted 8y ago
        [deleted]
        chlvsl 8y ago
        removing danger is not the primary goal lol. better to die a lion than live as a sheep.
        cylinder 8y ago
        Keep believing you live in a movie, works great for society.
        chlvsl 8y ago
        I don't live in a movie, but I definitely don't want to remove anything remotely dangerous to my person (see: everything) because it has the capacity for danger.
        oblio 8y ago
        We have a different mindset and tend to see the state as a big, albeit slow and annoying, institution that's meant to work for us (minus corruption). See Rousseau's "social contract". From what I've noticed Americans tend to lean more towards "state = bad; state = tyranny". There is a certain irony, seeing that bar outright dictatorships (China), the US state is and has been the strongest one for over half a century...
    - labster 8y ago
      The whole point of a federal government is to decentralize authority. If the taxation power rests with a single authority in the United States, then federalism would be dead and the central government would have all the power. It's not necessarily wrong (though I believe it would be a bad idea), but this is one of those questions where the answer to "Why can't the world be simple?" is "Because the world is complex."
      - cylinder 8y ago
        Works pretty well in Australia.
        meddlepal 8y ago
        Just because it works in Australia doesn't mean it would work in the US. Different people, different culture.
        labster 8y ago
        OK, I'll bite. Australia has a population of ~25 million, similar to Texas. So let's work with something of a similar scale to the U.S.: Would you be okay with having all of Australia's taxes being collected by the Commonwealth, and then getting your portion that way?
        tzs 8y ago
        The population is pretty much irrelevant to scaling for this problem. The relevant parameter is the number of political subdivisions that the national entity would be distributing taxes to, which would be ~50 in the US and ~6 in Australia.
        tzs 8y ago
        ...to elaborate, population is irrelevant because the national government is going to collect taxes nationwide for itself regardless of whether or not collecting taxes for the states is added to its duties. The "this problem" that we are talking about here is the problem of the national government handling state taxes in addition to national taxes. For this problem the national government is dealing with states, not individuals, and so it is the number of states that it has to deal with that is the main factor affecting complexity and scaling.
    - ajdlinux 8y ago
      That's the Australian approach, where the federal government collects all income taxes (courtesy of some interesting legal maneuvering in WW2) as well as sales taxes, leaving the states only able to collect payroll taxes, land taxes, mining royalties and a few other limited types of revenue. All sales tax revenue is 100% distributed back to the states - but it's done under a principle of "horizontal fiscal equalisation" (https://www.cgc.gov.au/index.php?option=com_content&view=article&id=258&Itemid=536 https://www.cgc.gov.au/index.php?option=com_content&view=art...) which means that richer states subsidise poorer states. Income tax is used to cover federal expenditure but also pays for a lot of federal grant money which is paid to the states. In general, the Australian approach to federalism is a lot more federal-heavy than in the US, and some part of that is driven by how the feds have completely taken over most forms of taxation and thus control all the purse strings.
      - BigJono 8y ago
        Shouldn't the fiscal equalisation strategy result in better infrastructure and more incentives for businesses and people to move to smaller states? It seems like the market is focused entirely on Sydney and Melbourne, and it's orders of magnitude more difficult to find a good job elsewhere.
        ajdlinux 8y ago
        I imagine the answer to that is that it does result in better infrastructure and more incentives to move to smaller states, and if we didn't base our tax policy around HFE then it would be even worse than it is now.
      - consp 8y ago
        While not a federation or federally instituted, this is exactly how it works in the Netherlands. The central government collects income tax, VAT and social security taxes, etc. The local government (e.g. municipalities mostly, provinces sometimes) get grants and spend it. Example: Healthcare is locally instituted by the municipalities/cities ("gemeenten") while the tax (social securities) are collected nation wide together with income tax. Please note that only the executive part is local. The municipalities can also levy taxes but usually only on common goods like sewage, water and on home ownership or equivalent for people who rent. The provinces do the same but it is far less than the central government does.
    - toomanybeersies 8y ago
      That's what's done in Australia. I'm not sure of the specifics of how the tax money is doled out, but all my income tax and sales tax goes to the federal government, which then divvies it out to the states. There are additional taxes in some states though, which are collected by the states, such as payroll tax, but I don't see that on my payslip.
    - keithpeter 8y ago
      UK: local authorities charge a property tax based on the value of homes determined some time ago. The amount raised is insufficient to cover costs so central government provide a 'revenue support grant' to each of the local authorities in the UK country in question. That money comes from income tax which is paid to the central government in the UK. The formula used to calculate the level of revenue support changes, some would say that the changes are politically based. My feeling is that, given the robust politics that appears to exist in the US, coupled with what again appears to be frequent recourse to litigation between levels of government, you don't want to go down that route.
      - isostatic 8y ago
        Now that Scotland can collect income tax separately, I wonder if we'll start seeing similar anomalies.
    - raverbashing 8y ago
      This is how it works pretty much everywhere, state taxes are only for specific things (not income tax). Or at least the states should have a double taxation treaty (but of course that would make sense so it's not going to be implemented)
    - boobsbr 8y ago
      It's the approach in Brazil, and it does not work out. States heavily depend on the Federal Government and have to constantly plead for funds. It's a mess, and I guess taking into account the size the of the US, the higher number of states, and a huge difference in their wealth/GDP, the situation will likely repeat itself.
      - taejo 8y ago
        There are anyway US states that are dependent on federal funds: the transfers are just sneakier and less efficient than in places where this is a constitutionally recognized process.
    - patrickmay 8y ago
      > Why don't we just pay the federal government the entirety of our tax obligation and have them partition it out to the states? That would give far too much power to a federal government that already far exceeds its constitutional mandate. I suggest the inverse: The federal government should get its funding only from the states. Each state can decide how much to contribute and how to raise the money. That would decentralize power significantly.
      - s73v3r_ 8y ago
        The Articles of Confederation want their failed idea back.
        patrickmay 8y ago
        It was only a failure if you think a strong federal government is a good idea. I offer the current situation as evidence against that.
        s73v3r_ 8y ago
        Or a failure if you want a functioning government. There's a reason the Articles were thrown out, and the inability of the Federal government to raise revenue so it could actually do stuff was one of the major reasons.
        dragonwriter 8y ago
        > It was only a failure if you think a strong federal government is a good idea. No, a stronger federal government was a solution that was proposed (and adopted) for it's manifest failure. It wasn't the idea that a strong federal government was good that led to the belief the Articles had failed, but exactly the reverse.
    - s73v3r_ 8y ago
      Do you want the Trump administration to be the arbiter of what states are able to spend their revenues on?
      - everdev 8y ago
        I wouldn't want it changing every election cycle, so I'd say it should be some combination of population or area. If states want more revenue than that, they they can add other consumption taxes like bridge tolls, sales tax, etc. that is collected at PoS. I just don't like having a complex math problem to do every year.
  - isostatic 8y ago
    > proving he spent over 183 days in new york versus cali What happens if you spend 73 days in each of 5 states? (OK the 183 day rule in NY specific). Do you have to pick a state to live in for tax purposes?
    - gamblor956 8y ago
      Generally the state where you own a home or else are registered to vote.
      - Latteland 8y ago
        So what if you have apartments in 3 states, 2 with high taxes, one with none, and 365/3 = 121 2/3. Pick a low tax state that has nice weather in the winter, say Florida. So 123 days in florida, 121 days in NY, 121 days in cali. Then you owe no tax. If you really wanted to screw things up you could pick a 4th state say the us virgin islands just for bureaucratic fun.
- lemonghost 8y ago
  This happens all of the time. For example, it is very common to live in NJ and work NYC. In that case, you pay NYC tax, NY and NJ tax and receive credit for your NJ tax based on the NY state tax you pay.
  - o_nate 8y ago
    The NYC commuter tax was repealed in 1999. You still have to pay NY state tax obviously.
    - lemonghost 8y ago
      You're right. Maybe I was confusing it with the Metropolitan Commuter tax.
forapurpose 8y ago
How is the current exceptional focus on taxes a productive policy? Taxes are investment in your (country/locality). While nobody likes the cost of investment, our lives and prosperity and everything else depends on it. And while some investments are worthwhile and some are not (just ask any VC!), to say we should minimize and avoid all investment is, of course, ridiculous. For example, nobody would suggest you minimize investment in your home unless you were leaving soon, or would advice YCombinator to minimize investment in startups unless they simple wanted to close out business now. You can't leave your country (or you must live somewhere) and it's never going out of business, you hope. Places with low investment (and taxes) in the U.S. and around the world generally have a lower quality of life and don't produce much beyond rent-seeking industries such as fossil fuels. Is the goal to model the U.S. economy on the great successes of places like Alabama,[0] or would it be better to model it on California or New York? Almost all leading industries, as well as education, arts and other things, are in high-investment places like California, New York, Michigan (automobile industry), etc. Successful people from low-investment areas move to high-investment areas to pursue their dreams, for straightforward economic reasons: that is where resources are. Tim Cook, from Mobile Alabama, comes to mind as well as the many entrepreneurs in SV from India. Almost nobody born in SV moves to Mobile to start their business. Smart kids from California go to Berkley, not U of Alabama, because the state has invested in higher education. The smartest kids from Mobile go to Berkley too (or to other leading universities in high-investment places). Poor countries are a simple example: They invest little out of necessity and their citizens are poorly educated and live harder and shorter lives. Under U.S. tax and investment policy, uniquely among wealthy countries life expectancy for Americans is now decreasing. [0] My apologies to Alabamans for using their state as a simplistic example of low-investment government. Of course there is much more to Alabama than that, and it's much more complicated than a simple number or stereotype. EDIT: some clarifications and enhancements
- valuearb 8y ago
  New York and California were not high tax states when they build the foundation of their wealth. And taxes aren’t an investment, and neither is most government spending. Most government spending is actually diverted to connected insiders.
sunstone 8y ago
America land of the free.
jedmeyers 8y ago
New Yorkers Trying to Evade High State Taxes Find Appearing To Have Moved To Another State Isn’t So Easy.
- mirimir 8y ago
  Right, what's hard is faking it, or moving just partially.
- pulse7 8y ago
  Yes, tax collectors are just checking if you really moved or not. So if you really move, then you will have (almost) no problems.
  - praffer 8y ago
    I wouldn't say "no problems." I've been through a New York State residency audit and it was protracted, stressful, intrusive, and expensive (for representation -- worth every penny), even though I had indeed really moved (long before the audit and not specifically for tax reasons), had loads of evidence to that effect, and was confident I would prevail in the end. (I did.) It was very unpleasant having it hanging over me for the better part of a year and I definitely thought of it as a major problem, perhaps the major problem in my life at the time, until it was resolved.
    - tomohawk 8y ago
      This definitely gives me pause when considering moving to a high tax state like NY. It sounds like the kind of state where you pay your taxes and just hope the government leaves you alone, which is likely untrue if you are or become a high earner. This kind of stuff will likely be litigated for years, especially as people with means are being harassed in this way. It will be interesting to see which of these tactics ultimately pass muster. I wonder if you could bring a RICO suite.
      - radicaldreamer 8y ago
        You're buying into a lot of FUD here, there are more high earners in New York and California than many other states and very few have the kinds of problems you're describing.
wpdev_63 8y ago
Say what you want about cryptocoin, atleast it doesn't have this problem:https://getmonero.org/ https://getmonero.org/
- millstone 8y ago
  This is false. Cryptocurrency earnings are subject to state capital gains taxes.
  - bumholio 8y ago
    I think the implication was "cryptocurrency cannot be subpoenaed by tax authorities when you are engaged in fiscal evasion". This is certainly true, with an off-shore debit card linked to a crypto wallet one can evade most local taxes, while being exceptionally hard to trace down, unless engaging in conspicuous consumption.
    - frozenport 8y ago
      I suspect the act of not paying for gains when converting them into money, would be criminal. You'd get caught when trying to cash out.
    - JumpCrisscross 8y ago
      > an off-shore debit card linked to a crypto wallet one can evade most local taxes This is willful tax evasion. It is a crime for which you go to jail.
  - ainiriand 8y ago
    You are correct. Under the present regulation they are just an asset, not a currency. So when you trade BTC is not the same as trading GBP, is that the only difference? Is taxation different in both cases?
- s73v3r_ 8y ago
  What problem? The problem of being able to mooch off your countrymen?
imroot 8y ago
I had this problem between Ohio and Kentucky about 10 years ago: I moved from Ohio to Kentucky, and they both considered me living in their state for the entire year. I gave up trying to fight it after about 5 years (!!) and just paid the $15K to the Commonwealth of Kentucky and moved on with my life. I now live in Florida -- legally and physically -- and don't have to deal with the headache of this crazy state income tax drama.
- millstone 8y ago
  Any advice? Would it perhaps have been better to move at the turn of the year to make the case easier?
- civilitty 8y ago
  What did they make you pay for when you moved from OH to KY?
  - matwood 8y ago
    What happens is that both states want income tax like you lived in the state for the full year.
    - imroot 8y ago
      Ohio didn't care that I moved out of Ohio in March, and Kentucky didn't care that I already paid Ohio. I was honestly just happy to pay it and get it over with.
    - 24gttghh 8y ago
      Are they so backwards they don't have a simple form to fill out if that is the case? e.g. in my state you file an additional schedule [0] to get exempted from state income tax for the part of the year you were no longer a resident. [0]https://www.maine.gov/revenue/faq/income_faq.html#faq1040_4 https://www.maine.gov/revenue/faq/income_faq.html#faq1040_4
      - 8y ago
shiftoutbox 8y ago
Yes, in the rest of the country where taxes are “low” states and municipalities either sacrifice services we take for granted or believe industry will self regulate. So there are no things Like garbage collection, paying teachers a good wage , reviewing the text books schools teach with to insure the are not packed with lies . Keeping emergency services operating 24/7 , insuring hospitals are staffed and open , running public institutions of higher learning for the benefit of the public (according to the actual concept of not for profit, not scamming the government) . Going after white collar crime and properly regulating various industries to prevent owners and operators from cutting corners and building unsafe , dangerous or otherwise unwanted structures, products and food . Yes running a state takes money , pretending that this stuff is only for the poor folk and doing none of it is cheap and easy .
matt_s 8y ago
I don't know why anyone would want to appear to leave. Just leave. The property taxes are ridiculous, infrastructure is falling apart, etc. On a recent trip back up there you can tell when you hit NYS roads - rusted bridges and crumbling asphalt pock marked with pot holes that can damage your car. Maybe they should focus on things to make people want to stay? It would be like a SaaS business changing the contracts so people can't leave (e.g. can't take data) instead of building features that people want.
- apta 8y ago
  > On a recent trip back up there you can tell when you hit NYS roads - rusted bridges and crumbling asphalt pock marked with pot holes that can damage your car. Genuine question: where else in the US are roads better? I've been to several states and some Canadian provinces, and compared to the developed Gulf nations, all of the roads I saw there were like what described.
  - matt_s 8y ago
    I was mostly referring to highway roads in poor shape. They were bad in other states but noticeably worse in NY. Driving up from the south you do notice a "line" sort of where you enter areas that more commonly get snow and the highway degrades a bit but then entering NY seemed like even worse.
  - adwi 8y ago
    Parent poster was right on the money. I’ve lived in 5 US states with state income taxes ranging from zero percent to merely substantially lower—nevermind a “city tax” that’s in addition and higher that most state taxes—and uniformally the roads and bridges are significantly better than NYS. And then there’s the billions NYC collects annually in fines [0]. Does anyone know the root cause of this? Where does all of the revenue go? [0] www.dnainfo.com/new-york/20160324/civic-center/new-york-city-collects-record-19-billion-fines-fees.amp
    - mch82 8y ago
      Traffic, structural model, materials, environment. I found a few websites that seem to have repackaged this professor's lecture notes and then found the original.[1] The most unexpected insight was that slow traffic is a big factor. NY and LA definitely have slow traffic compared to most other cities in the US. [1]: Mathew, Tom V. "Factors affecting pavement design." 3 August 2009. https://www.civil.iitb.ac.in/tvm/1100_LnTse/402_lnTse/plain/plain.html https://www.civil.iitb.ac.in/tvm/1100_LnTse/402_lnTse/plain/... " I also found this Virginia Tech paper that lists a number of citations that may provide additional insight, https://vtechworks.lib.vt.edu/handle/10919/56449 https://vtechworks.lib.vt.edu/handle/10919/56449
justinph 8y ago
New York is also aggressive about collecting taxes from remote employees. If you work for a NY-based company, but live in another state, you most likely have to pay NYS income taxes. Depending on how your _actual_ home state deals with things, you might end up double-taxed.
- fhood 8y ago
  Well we wouldn't want important services such as the MTA to run out of money and turn into a dysfunctional and corrupt mess. Edit: I have a love/hate relationship with NY and NYC in particular.
  - jrockway 8y ago
    To be fair, the MTA has largely been NYS's piggy bank for decades. That's why it's gotten this bad; it's being used to subsidize all the services upstate that don't generate any revenue. The New York Times made an interesting video about it: https://www.youtube.com/watch?v=COLMODzYX7U https://www.youtube.com/watch?v=COLMODzYX7U
    - kevin_thibedeau 8y ago
      MTA runs as a net loss. It isn't a piggybank if it is dependent on subsidies from somewhere outside fares and ads to pay the bills.
      - jrockway 8y ago
        I mean, yes, but part of the reason why it runs at a loss is because how it subsidizes the rest of the state. For example, when the MTA wants to issue a bond, it has to pay NYS a bond issuance fee. This has added up to about $105MM since 2006.
- driverdan 8y ago
  Source?
dixie_land 8y ago
If you really decide never to set foot in the filthy dump that is NYC, why do you care about their claim on taxing authority anyways? Can they enforce that across state line?
- lemonghost 8y ago
  Not to be pedantic but the article is about NY state, NJ, CT etc. Many people live in NY state but do not live in NYC. Additionally, as the article explains, some people try to live outside of the state for over half the year in order to avoid paying state taxes. Presumably, there are considerable financial and personal incentives for maintaining some presence in NY state. So, the answer to your question is yes because the people in question are still typically maintaining a residence in a high tax state.
joshuaheard 8y ago
People aren't moving because the rich would rather pay a little extra and do what they want. What I find interesting is that, in following the California real estate market for the last two years in preparation to moving there, there is a drop in demand for high-end housing since the tax law took effect. The combination of higher taxes and lower mortgage deductions has kept a lot of people from buying bigger houses. I've also seen a lot of empty-nesters downsizing.
- gamblor956 8y ago
  Interesting. From the perspective of someone already living in California, there has been an increase in demand for high-end houses in SoCal despite the tax law changes. Pricing trends plateaued briefly the first half of the year but half resumed their upward climb, especially in the nice parts of LA.
  - lscore720 8y ago
    Just replied above to OP with today's news report on SoCal home prices - thought you might find interesting!
    - gamblor956 8y ago
      Pretty interesting. I happen to live in one of those areas where demand has not only held steady but somehow increased since last year--I've received multiple (cash!) offers on my place in the past 3 months and many of my fellow condo owners have had the same experience, but I can definitely see interest rates reducing demand in less desirable neighborhoods.
- lscore720 8y ago
  New report released today "Southern California home sales crash, a warning sign to the nation": https://www.cnbc.com/2018/07/24/southern-california-home-sales-crash-a-warning-sign-to-the-nation.html https://www.cnbc.com/2018/07/24/southern-california-home-sal... Interestingly enough, the higher priced homes are the only ones somewhat holding up. "Sales below $500,000 dropped 21 percent on a year-over-year basis, while deals of $500,000 or more fell about 3 percent, marking the first annual decline for that price category in nearly two years,” said LePage. “Home sales of $1 million or more last month rose just a tad – less than 1 percent – from a year earlier following annual gains of between 5 percent and 21 percent over the prior year.”
sonnyblarney 8y ago
I don't understand how the effective tax rate in NY can be the same as Ontario, Canada - but here in Canada we have at least healthcare for all citizens that gets paid for out of that. It's not A+ care but it's good, and it covers everyone. And it's like 1/3 of the budget, it's a huge line item. What the heyzeus are you Americans spending all that tax money on? More on topic: the same issue exists between US and Canada, and it needs to be sorted. Some ports of entry on the US/Mexico border are not properly set up to process TN visas etc..
- justinator 8y ago
  > What the heyzeus are you Americans spending all that tax money on? The Military.
  - danielvf 8y ago
    Out of the 4 trillion dollars the US Federal government spent in 2016 (the last year we had a full budget), 0.631 trillion of that was for the military. An almost infinitesimal part of the New York state budget is for the state national guard.
    - justinator 8y ago
      In 2016, the US Military Spending was roughly HALF of the Discretionary Spending of the budget, which you are correct, in that it totaled ~1.15 Trillion
    - pascalxus 8y ago
      for Federal it's a lot higher than that. there are many defense expenditures hidden in other departments/categories.
    - monetus 8y ago
      Plus the mystery budget: https://en.m.wikipedia.org/wiki/Black_budget https://en.m.wikipedia.org/wiki/Black_budget WaPo estimated it was $52.8 billion in 2012.
- 8y ago
jackconnor 8y ago
Article is not about people moving, it's about people trying to get registered in a different state for tax purposes. BIG difference.

120 points by kimsk112 8y ago

what if two higher tax states both claim they are your home state because they want to fight over your taxes. this must happen. that's different than moving 'mostly' to a lower tax state. and then what's the threshold for ny claiming you moved there? what a mess.

joering2 8y ago
It happened to my buddy who happens to be millionaire and flies every few weeks cali versus new york. Two years ago state of california sued him for non payment of taxes. It went down to literally receipts from gas station making difference proving he spent over 183 days in new york versus cali. intresting - credit card purchases were not admitted because state tried to prove he used proxy (he does) so he could be in any state when purchasing off of Amazon. He won and gov appealed Then cali went after new york asking for all the evidence of his taxes knowing new york wont comply. For over year both states fight with each other with my friend being literally non-involved. Eventually cali dropped the suit some 16 months after filing appeal.
- everdev 8y ago
  This is insane. Why don't we just pay the federal government the entirety of our tax obligation and have them partition it out to the states? I'd love to spend less than half the year in any one state or be completely state-less.
  - efnx 8y ago
    That sounds dangerous.
    - idiocratic 8y ago
      Dangerous in what way? I'm European and baffled by this sentence.
      - cylinder 8y ago
        Americans are deathly afraid of government. It's not just the lower or extreme classes. As you can see it's pervasive even on HN. The irony is that Europe, Australia etc are much less "dangerous" than the US
        isostatic 8y ago
        Have you seen who they elect?
        deleted 8y ago
        [deleted]
        chlvsl 8y ago
        removing danger is not the primary goal lol. better to die a lion than live as a sheep.
        cylinder 8y ago
        Keep believing you live in a movie, works great for society.
        chlvsl 8y ago
        I don't live in a movie, but I definitely don't want to remove anything remotely dangerous to my person (see: everything) because it has the capacity for danger.
      - oblio 8y ago
        We have a different mindset and tend to see the state as a big, albeit slow and annoying, institution that's meant to work for us (minus corruption). See Rousseau's "social contract". From what I've noticed Americans tend to lean more towards "state = bad; state = tyranny". There is a certain irony, seeing that bar outright dictatorships (China), the US state is and has been the strongest one for over half a century...
  - labster 8y ago
    The whole point of a federal government is to decentralize authority. If the taxation power rests with a single authority in the United States, then federalism would be dead and the central government would have all the power. It's not necessarily wrong (though I believe it would be a bad idea), but this is one of those questions where the answer to "Why can't the world be simple?" is "Because the world is complex."
    - cylinder 8y ago
      Works pretty well in Australia.
      - meddlepal 8y ago
        Just because it works in Australia doesn't mean it would work in the US. Different people, different culture.
      - labster 8y ago
        OK, I'll bite. Australia has a population of ~25 million, similar to Texas. So let's work with something of a similar scale to the U.S.: Would you be okay with having all of Australia's taxes being collected by the Commonwealth, and then getting your portion that way?
        tzs 8y ago
        The population is pretty much irrelevant to scaling for this problem. The relevant parameter is the number of political subdivisions that the national entity would be distributing taxes to, which would be ~50 in the US and ~6 in Australia.
        tzs 8y ago
        ...to elaborate, population is irrelevant because the national government is going to collect taxes nationwide for itself regardless of whether or not collecting taxes for the states is added to its duties. The "this problem" that we are talking about here is the problem of the national government handling state taxes in addition to national taxes. For this problem the national government is dealing with states, not individuals, and so it is the number of states that it has to deal with that is the main factor affecting complexity and scaling.
  - ajdlinux 8y ago
    That's the Australian approach, where the federal government collects all income taxes (courtesy of some interesting legal maneuvering in WW2) as well as sales taxes, leaving the states only able to collect payroll taxes, land taxes, mining royalties and a few other limited types of revenue. All sales tax revenue is 100% distributed back to the states - but it's done under a principle of "horizontal fiscal equalisation" (https://www.cgc.gov.au/index.php?option=com_content&view=article&id=258&Itemid=536 https://www.cgc.gov.au/index.php?option=com_content&view=art...) which means that richer states subsidise poorer states. Income tax is used to cover federal expenditure but also pays for a lot of federal grant money which is paid to the states. In general, the Australian approach to federalism is a lot more federal-heavy than in the US, and some part of that is driven by how the feds have completely taken over most forms of taxation and thus control all the purse strings.
    - BigJono 8y ago
      Shouldn't the fiscal equalisation strategy result in better infrastructure and more incentives for businesses and people to move to smaller states? It seems like the market is focused entirely on Sydney and Melbourne, and it's orders of magnitude more difficult to find a good job elsewhere.
      - ajdlinux 8y ago
        I imagine the answer to that is that it does result in better infrastructure and more incentives to move to smaller states, and if we didn't base our tax policy around HFE then it would be even worse than it is now.
    - consp 8y ago
      While not a federation or federally instituted, this is exactly how it works in the Netherlands. The central government collects income tax, VAT and social security taxes, etc. The local government (e.g. municipalities mostly, provinces sometimes) get grants and spend it. Example: Healthcare is locally instituted by the municipalities/cities ("gemeenten") while the tax (social securities) are collected nation wide together with income tax. Please note that only the executive part is local. The municipalities can also levy taxes but usually only on common goods like sewage, water and on home ownership or equivalent for people who rent. The provinces do the same but it is far less than the central government does.
  - toomanybeersies 8y ago
    That's what's done in Australia. I'm not sure of the specifics of how the tax money is doled out, but all my income tax and sales tax goes to the federal government, which then divvies it out to the states. There are additional taxes in some states though, which are collected by the states, such as payroll tax, but I don't see that on my payslip.
  - keithpeter 8y ago
    UK: local authorities charge a property tax based on the value of homes determined some time ago. The amount raised is insufficient to cover costs so central government provide a 'revenue support grant' to each of the local authorities in the UK country in question. That money comes from income tax which is paid to the central government in the UK. The formula used to calculate the level of revenue support changes, some would say that the changes are politically based. My feeling is that, given the robust politics that appears to exist in the US, coupled with what again appears to be frequent recourse to litigation between levels of government, you don't want to go down that route.
    - isostatic 8y ago
      Now that Scotland can collect income tax separately, I wonder if we'll start seeing similar anomalies.
  - raverbashing 8y ago
    This is how it works pretty much everywhere, state taxes are only for specific things (not income tax). Or at least the states should have a double taxation treaty (but of course that would make sense so it's not going to be implemented)
  - boobsbr 8y ago
    It's the approach in Brazil, and it does not work out. States heavily depend on the Federal Government and have to constantly plead for funds. It's a mess, and I guess taking into account the size the of the US, the higher number of states, and a huge difference in their wealth/GDP, the situation will likely repeat itself.
    - taejo 8y ago
      There are anyway US states that are dependent on federal funds: the transfers are just sneakier and less efficient than in places where this is a constitutionally recognized process.
  - patrickmay 8y ago
    > Why don't we just pay the federal government the entirety of our tax obligation and have them partition it out to the states? That would give far too much power to a federal government that already far exceeds its constitutional mandate. I suggest the inverse: The federal government should get its funding only from the states. Each state can decide how much to contribute and how to raise the money. That would decentralize power significantly.
    - s73v3r_ 8y ago
      The Articles of Confederation want their failed idea back.
      - patrickmay 8y ago
        It was only a failure if you think a strong federal government is a good idea. I offer the current situation as evidence against that.
        s73v3r_ 8y ago
        Or a failure if you want a functioning government. There's a reason the Articles were thrown out, and the inability of the Federal government to raise revenue so it could actually do stuff was one of the major reasons.
        dragonwriter 8y ago
        > It was only a failure if you think a strong federal government is a good idea. No, a stronger federal government was a solution that was proposed (and adopted) for it's manifest failure. It wasn't the idea that a strong federal government was good that led to the belief the Articles had failed, but exactly the reverse.
  - s73v3r_ 8y ago
    Do you want the Trump administration to be the arbiter of what states are able to spend their revenues on?
    - everdev 8y ago
      I wouldn't want it changing every election cycle, so I'd say it should be some combination of population or area. If states want more revenue than that, they they can add other consumption taxes like bridge tolls, sales tax, etc. that is collected at PoS. I just don't like having a complex math problem to do every year.
- isostatic 8y ago
  > proving he spent over 183 days in new york versus cali What happens if you spend 73 days in each of 5 states? (OK the 183 day rule in NY specific). Do you have to pick a state to live in for tax purposes?
  - gamblor956 8y ago
    Generally the state where you own a home or else are registered to vote.
    - Latteland 8y ago
      So what if you have apartments in 3 states, 2 with high taxes, one with none, and 365/3 = 121 2/3. Pick a low tax state that has nice weather in the winter, say Florida. So 123 days in florida, 121 days in NY, 121 days in cali. Then you owe no tax. If you really wanted to screw things up you could pick a 4th state say the us virgin islands just for bureaucratic fun.
lemonghost 8y ago
This happens all of the time. For example, it is very common to live in NJ and work NYC. In that case, you pay NYC tax, NY and NJ tax and receive credit for your NJ tax based on the NY state tax you pay.
- o_nate 8y ago
  The NYC commuter tax was repealed in 1999. You still have to pay NY state tax obviously.
  - lemonghost 8y ago
    You're right. Maybe I was confusing it with the Metropolitan Commuter tax.

forapurpose 8y ago

How is the current exceptional focus on taxes a productive policy? Taxes are investment in your (country/locality). While nobody likes the cost of investment, our lives and prosperity and everything else depends on it. And while some investments are worthwhile and some are not (just ask any VC!), to say we should minimize and avoid all investment is, of course, ridiculous. For example, nobody would suggest you minimize investment in your home unless you were leaving soon, or would advice YCombinator to minimize investment in startups unless they simple wanted to close out business now. You can't leave your country (or you must live somewhere) and it's never going out of business, you hope. Places with low investment (and taxes) in the U.S. and around the world generally have a lower quality of life and don't produce much beyond rent-seeking industries such as fossil fuels. Is the goal to model the U.S. economy on the great successes of places like Alabama,[0] or would it be better to model it on California or New York? Almost all leading industries, as well as education, arts and other things, are in high-investment places like California, New York, Michigan (automobile industry), etc. Successful people from low-investment areas move to high-investment areas to pursue their dreams, for straightforward economic reasons: that is where resources are. Tim Cook, from Mobile Alabama, comes to mind as well as the many entrepreneurs in SV from India. Almost nobody born in SV moves to Mobile to start their business. Smart kids from California go to Berkley, not U of Alabama, because the state has invested in higher education. The smartest kids from Mobile go to Berkley too (or to other leading universities in high-investment places). Poor countries are a simple example: They invest little out of necessity and their citizens are poorly educated and live harder and shorter lives. Under U.S. tax and investment policy, uniquely among wealthy countries life expectancy for Americans is now decreasing. [0] My apologies to Alabamans for using their state as a simplistic example of low-investment government. Of course there is much more to Alabama than that, and it's much more complicated than a simple number or stereotype. EDIT: some clarifications and enhancements

valuearb 8y ago
New York and California were not high tax states when they build the foundation of their wealth. And taxes aren’t an investment, and neither is most government spending. Most government spending is actually diverted to connected insiders.

sunstone 8y ago

America land of the free.

jedmeyers 8y ago

New Yorkers Trying to Evade High State Taxes Find Appearing To Have Moved To Another State Isn’t So Easy.

mirimir 8y ago
Right, what's hard is faking it, or moving just partially.
pulse7 8y ago
Yes, tax collectors are just checking if you really moved or not. So if you really move, then you will have (almost) no problems.
- praffer 8y ago
  I wouldn't say "no problems." I've been through a New York State residency audit and it was protracted, stressful, intrusive, and expensive (for representation -- worth every penny), even though I had indeed really moved (long before the audit and not specifically for tax reasons), had loads of evidence to that effect, and was confident I would prevail in the end. (I did.) It was very unpleasant having it hanging over me for the better part of a year and I definitely thought of it as a major problem, perhaps the major problem in my life at the time, until it was resolved.
  - tomohawk 8y ago
    This definitely gives me pause when considering moving to a high tax state like NY. It sounds like the kind of state where you pay your taxes and just hope the government leaves you alone, which is likely untrue if you are or become a high earner. This kind of stuff will likely be litigated for years, especially as people with means are being harassed in this way. It will be interesting to see which of these tactics ultimately pass muster. I wonder if you could bring a RICO suite.
    - radicaldreamer 8y ago
      You're buying into a lot of FUD here, there are more high earners in New York and California than many other states and very few have the kinds of problems you're describing.

wpdev_63 8y ago

Say what you want about cryptocoin, atleast it doesn't have this problem:https://getmonero.org/ https://getmonero.org/

millstone 8y ago
This is false. Cryptocurrency earnings are subject to state capital gains taxes.
- bumholio 8y ago
  I think the implication was "cryptocurrency cannot be subpoenaed by tax authorities when you are engaged in fiscal evasion". This is certainly true, with an off-shore debit card linked to a crypto wallet one can evade most local taxes, while being exceptionally hard to trace down, unless engaging in conspicuous consumption.
  - frozenport 8y ago
    I suspect the act of not paying for gains when converting them into money, would be criminal. You'd get caught when trying to cash out.
  - JumpCrisscross 8y ago
    > an off-shore debit card linked to a crypto wallet one can evade most local taxes This is willful tax evasion. It is a crime for which you go to jail.
- ainiriand 8y ago
  You are correct. Under the present regulation they are just an asset, not a currency. So when you trade BTC is not the same as trading GBP, is that the only difference? Is taxation different in both cases?
s73v3r_ 8y ago
What problem? The problem of being able to mooch off your countrymen?

imroot 8y ago

I had this problem between Ohio and Kentucky about 10 years ago: I moved from Ohio to Kentucky, and they both considered me living in their state for the entire year. I gave up trying to fight it after about 5 years (!!) and just paid the $15K to the Commonwealth of Kentucky and moved on with my life. I now live in Florida -- legally and physically -- and don't have to deal with the headache of this crazy state income tax drama.

millstone 8y ago
Any advice? Would it perhaps have been better to move at the turn of the year to make the case easier?
civilitty 8y ago
What did they make you pay for when you moved from OH to KY?
- matwood 8y ago
  What happens is that both states want income tax like you lived in the state for the full year.
  - imroot 8y ago
    Ohio didn't care that I moved out of Ohio in March, and Kentucky didn't care that I already paid Ohio. I was honestly just happy to pay it and get it over with.
  - 24gttghh 8y ago
    Are they so backwards they don't have a simple form to fill out if that is the case? e.g. in my state you file an additional schedule [0] to get exempted from state income tax for the part of the year you were no longer a resident. [0]https://www.maine.gov/revenue/faq/income_faq.html#faq1040_4 https://www.maine.gov/revenue/faq/income_faq.html#faq1040_4
    - 8y ago

shiftoutbox 8y ago

Yes, in the rest of the country where taxes are “low” states and municipalities either sacrifice services we take for granted or believe industry will self regulate. So there are no things Like garbage collection, paying teachers a good wage , reviewing the text books schools teach with to insure the are not packed with lies . Keeping emergency services operating 24/7 , insuring hospitals are staffed and open , running public institutions of higher learning for the benefit of the public (according to the actual concept of not for profit, not scamming the government) . Going after white collar crime and properly regulating various industries to prevent owners and operators from cutting corners and building unsafe , dangerous or otherwise unwanted structures, products and food . Yes running a state takes money , pretending that this stuff is only for the poor folk and doing none of it is cheap and easy .

matt_s 8y ago

I don't know why anyone would want to appear to leave. Just leave. The property taxes are ridiculous, infrastructure is falling apart, etc. On a recent trip back up there you can tell when you hit NYS roads - rusted bridges and crumbling asphalt pock marked with pot holes that can damage your car. Maybe they should focus on things to make people want to stay? It would be like a SaaS business changing the contracts so people can't leave (e.g. can't take data) instead of building features that people want.

apta 8y ago
> On a recent trip back up there you can tell when you hit NYS roads - rusted bridges and crumbling asphalt pock marked with pot holes that can damage your car. Genuine question: where else in the US are roads better? I've been to several states and some Canadian provinces, and compared to the developed Gulf nations, all of the roads I saw there were like what described.
- matt_s 8y ago
  I was mostly referring to highway roads in poor shape. They were bad in other states but noticeably worse in NY. Driving up from the south you do notice a "line" sort of where you enter areas that more commonly get snow and the highway degrades a bit but then entering NY seemed like even worse.
- adwi 8y ago
  Parent poster was right on the money. I’ve lived in 5 US states with state income taxes ranging from zero percent to merely substantially lower—nevermind a “city tax” that’s in addition and higher that most state taxes—and uniformally the roads and bridges are significantly better than NYS. And then there’s the billions NYC collects annually in fines [0]. Does anyone know the root cause of this? Where does all of the revenue go? [0] www.dnainfo.com/new-york/20160324/civic-center/new-york-city-collects-record-19-billion-fines-fees.amp
  - mch82 8y ago
    Traffic, structural model, materials, environment. I found a few websites that seem to have repackaged this professor's lecture notes and then found the original.[1] The most unexpected insight was that slow traffic is a big factor. NY and LA definitely have slow traffic compared to most other cities in the US. [1]: Mathew, Tom V. "Factors affecting pavement design." 3 August 2009. https://www.civil.iitb.ac.in/tvm/1100_LnTse/402_lnTse/plain/plain.html https://www.civil.iitb.ac.in/tvm/1100_LnTse/402_lnTse/plain/... " I also found this Virginia Tech paper that lists a number of citations that may provide additional insight, https://vtechworks.lib.vt.edu/handle/10919/56449 https://vtechworks.lib.vt.edu/handle/10919/56449

justinph 8y ago

New York is also aggressive about collecting taxes from remote employees. If you work for a NY-based company, but live in another state, you most likely have to pay NYS income taxes. Depending on how your _actual_ home state deals with things, you might end up double-taxed.

fhood 8y ago
Well we wouldn't want important services such as the MTA to run out of money and turn into a dysfunctional and corrupt mess. Edit: I have a love/hate relationship with NY and NYC in particular.
- jrockway 8y ago
  To be fair, the MTA has largely been NYS's piggy bank for decades. That's why it's gotten this bad; it's being used to subsidize all the services upstate that don't generate any revenue. The New York Times made an interesting video about it: https://www.youtube.com/watch?v=COLMODzYX7U https://www.youtube.com/watch?v=COLMODzYX7U
  - kevin_thibedeau 8y ago
    MTA runs as a net loss. It isn't a piggybank if it is dependent on subsidies from somewhere outside fares and ads to pay the bills.
    - jrockway 8y ago
      I mean, yes, but part of the reason why it runs at a loss is because how it subsidizes the rest of the state. For example, when the MTA wants to issue a bond, it has to pay NYS a bond issuance fee. This has added up to about $105MM since 2006.
driverdan 8y ago
Source?

dixie_land 8y ago

If you really decide never to set foot in the filthy dump that is NYC, why do you care about their claim on taxing authority anyways? Can they enforce that across state line?

lemonghost 8y ago
Not to be pedantic but the article is about NY state, NJ, CT etc. Many people live in NY state but do not live in NYC. Additionally, as the article explains, some people try to live outside of the state for over half the year in order to avoid paying state taxes. Presumably, there are considerable financial and personal incentives for maintaining some presence in NY state. So, the answer to your question is yes because the people in question are still typically maintaining a residence in a high tax state.

joshuaheard 8y ago

People aren't moving because the rich would rather pay a little extra and do what they want. What I find interesting is that, in following the California real estate market for the last two years in preparation to moving there, there is a drop in demand for high-end housing since the tax law took effect. The combination of higher taxes and lower mortgage deductions has kept a lot of people from buying bigger houses. I've also seen a lot of empty-nesters downsizing.

gamblor956 8y ago
Interesting. From the perspective of someone already living in California, there has been an increase in demand for high-end houses in SoCal despite the tax law changes. Pricing trends plateaued briefly the first half of the year but half resumed their upward climb, especially in the nice parts of LA.
- lscore720 8y ago
  Just replied above to OP with today's news report on SoCal home prices - thought you might find interesting!
  - gamblor956 8y ago
    Pretty interesting. I happen to live in one of those areas where demand has not only held steady but somehow increased since last year--I've received multiple (cash!) offers on my place in the past 3 months and many of my fellow condo owners have had the same experience, but I can definitely see interest rates reducing demand in less desirable neighborhoods.
lscore720 8y ago
New report released today "Southern California home sales crash, a warning sign to the nation": https://www.cnbc.com/2018/07/24/southern-california-home-sales-crash-a-warning-sign-to-the-nation.html https://www.cnbc.com/2018/07/24/southern-california-home-sal... Interestingly enough, the higher priced homes are the only ones somewhat holding up. "Sales below $500,000 dropped 21 percent on a year-over-year basis, while deals of $500,000 or more fell about 3 percent, marking the first annual decline for that price category in nearly two years,” said LePage. “Home sales of $1 million or more last month rose just a tad – less than 1 percent – from a year earlier following annual gains of between 5 percent and 21 percent over the prior year.”

sonnyblarney 8y ago

I don't understand how the effective tax rate in NY can be the same as Ontario, Canada - but here in Canada we have at least healthcare for all citizens that gets paid for out of that. It's not A+ care but it's good, and it covers everyone. And it's like 1/3 of the budget, it's a huge line item. What the heyzeus are you Americans spending all that tax money on? More on topic: the same issue exists between US and Canada, and it needs to be sorted. Some ports of entry on the US/Mexico border are not properly set up to process TN visas etc..

justinator 8y ago
> What the heyzeus are you Americans spending all that tax money on? The Military.
- danielvf 8y ago
  Out of the 4 trillion dollars the US Federal government spent in 2016 (the last year we had a full budget), 0.631 trillion of that was for the military. An almost infinitesimal part of the New York state budget is for the state national guard.
  - justinator 8y ago
    In 2016, the US Military Spending was roughly HALF of the Discretionary Spending of the budget, which you are correct, in that it totaled ~1.15 Trillion
  - pascalxus 8y ago
    for Federal it's a lot higher than that. there are many defense expenditures hidden in other departments/categories.
  - monetus 8y ago
    Plus the mystery budget: https://en.m.wikipedia.org/wiki/Black_budget https://en.m.wikipedia.org/wiki/Black_budget WaPo estimated it was $52.8 billion in 2012.
8y ago

jackconnor 8y ago

Article is not about people moving, it's about people trying to get registered in a different state for tax purposes. BIG difference.