4 ms·

Am half of a high earning couple in a bit above this range in California. Surprisingly, my taxes changed very little this year. In years prior, I always had to

by esf 8y ago

Am half of a high earning couple in a bit above this range in California. Surprisingly, my taxes changed very little this year. In years prior, I always had to pay AMT, in which SALT deductions were already disallowed. The new tax law is basically a wash. I don't pay AMT, just pay higher regular. I didn't check exactly but my effective rate this year may even have gone down a little. Many people in this income range will find similar.

eclipxe 8y ago
Yep, not a fan of the tax plan but it seems like a lot of folks forget about AMT. AMT made state and local tax deductions pointless.
CoolGuySteve 8y ago
I’ve been doing the same math for NYC since I work remotely. The thing is, I can still move to another state and not pay state taxes or AMT. I like NYC but I’m not sure I still like it tens of thousands of dollars much after this latest tax reform.
- esf 8y ago
  Sure, but the status quo in California didn't really change with the new tax law for this income group, contra the comment. If the taxes didn't deter you before, they aren't different now.
gnicholas 8y ago
Interesting to hear this. I used to be a high-earner (was a tax lawyer before a startup founder) in CA and never ran into the AMT. I see several folks mention the AMT below, but if no one was getting a SALT benefit before, how could the cap have been a revenue-raiser (which it was scored as) in the tax bill? I realize that the lower rates help out high earners and can mitigate the effect of the SALT cap. But all high earners across the country get the benefit of low rates, whereas only the ones in high tax states get hit with the cap. So when weighing the choice between being a relatively high earners in a low tax state or a super high earners in a high tax state, the balance shifts toward the low tax state.
- esf 8y ago
  It's a revenue raiser because it does raise the taxes of people outside this range. Primarily people in 500k - 1m range were hitting AMT before, especially if married or with children. Don't misunderstand me: I am responding only to the parent comment that the new tax law will massively change things for a 500k couple due to deductions. For that specific range for a married couple it won't (because they likely already were paying higher taxes due to AMT). To your second point, that's also highly individual. My household income is ~800k. That makes my California effective tax rate 8.9%. I personally would have a hard time finding jobs for both my husband and myself in a new state taking only an 8.9% pay cut. The phenomenon discussed in the article of continuing net inflow of high earners to California and out flow of middle and lower earners is not new: https://www.sacbee.com/news/state/california/article136478098.html https://www.sacbee.com/news/state/california/article13647809... I am not saying this is good! But the simplistic "everyone is fleeing high CA taxes" narrative is not supported by the data. What is happening is not good for California but also more complicated than that. I would say the burden of high housing costs absolutely dwarfs the effect of taxes for most people.
- dragonwriter 8y ago
  > but if no one was getting a SALT benefit before, how could the cap have been a revenue-raiser (which it was scored as) in the tax bill? It hits people with lower-but-still middle-class to upper-middle-class, who weren't hitting the AMT before but still would have state/local taxes above the SALT cap.
- gamechangr 8y ago
  If you make $1 M SALT changes are bad news, if you make $500k it doesn't matter. The media wants it to effect the middle class, so they leave that part out.

by esf 8y ago

eclipxe 8y ago

Yep, not a fan of the tax plan but it seems like a lot of folks forget about AMT. AMT made state and local tax deductions pointless.

CoolGuySteve 8y ago

I’ve been doing the same math for NYC since I work remotely. The thing is, I can still move to another state and not pay state taxes or AMT. I like NYC but I’m not sure I still like it tens of thousands of dollars much after this latest tax reform.

esf 8y ago
Sure, but the status quo in California didn't really change with the new tax law for this income group, contra the comment. If the taxes didn't deter you before, they aren't different now.

gnicholas 8y ago

Interesting to hear this. I used to be a high-earner (was a tax lawyer before a startup founder) in CA and never ran into the AMT. I see several folks mention the AMT below, but if no one was getting a SALT benefit before, how could the cap have been a revenue-raiser (which it was scored as) in the tax bill? I realize that the lower rates help out high earners and can mitigate the effect of the SALT cap. But all high earners across the country get the benefit of low rates, whereas only the ones in high tax states get hit with the cap. So when weighing the choice between being a relatively high earners in a low tax state or a super high earners in a high tax state, the balance shifts toward the low tax state.

esf 8y ago
It's a revenue raiser because it does raise the taxes of people outside this range. Primarily people in 500k - 1m range were hitting AMT before, especially if married or with children. Don't misunderstand me: I am responding only to the parent comment that the new tax law will massively change things for a 500k couple due to deductions. For that specific range for a married couple it won't (because they likely already were paying higher taxes due to AMT). To your second point, that's also highly individual. My household income is ~800k. That makes my California effective tax rate 8.9%. I personally would have a hard time finding jobs for both my husband and myself in a new state taking only an 8.9% pay cut. The phenomenon discussed in the article of continuing net inflow of high earners to California and out flow of middle and lower earners is not new: https://www.sacbee.com/news/state/california/article136478098.html https://www.sacbee.com/news/state/california/article13647809... I am not saying this is good! But the simplistic "everyone is fleeing high CA taxes" narrative is not supported by the data. What is happening is not good for California but also more complicated than that. I would say the burden of high housing costs absolutely dwarfs the effect of taxes for most people.
dragonwriter 8y ago
> but if no one was getting a SALT benefit before, how could the cap have been a revenue-raiser (which it was scored as) in the tax bill? It hits people with lower-but-still middle-class to upper-middle-class, who weren't hitting the AMT before but still would have state/local taxes above the SALT cap.
gamechangr 8y ago
If you make $1 M SALT changes are bad news, if you make $500k it doesn't matter. The media wants it to effect the middle class, so they leave that part out.