6 ms·

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 mak

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.

cptroot 6y ago
I mean, doesn't California tax you even if you live somewhere else but work in California?
- proverbialbunny 6y ago
  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.
- badfrog 6y ago
  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.
  - steffan 6y ago
    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)
    - vitus 6y ago
      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.
    - jstepka 6y ago
      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.
  - bsharitt 6y ago
    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.
- beaner 6y ago
  Would be interesting to hear the answer if anyone knows it.
  - azimuth11 6y ago
    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.
  - ghaff 6y ago
    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).
- steffan 6y ago
  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.
  - qppo 6y ago
    After MD v Wynne, I think they'd have to give tax credits to income tax paid in other states if they tried that.
    - ninkendo 6y ago
      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.
  - closeparen 6y ago
    Tech companies are Deleware businesses, though. You'd have to do something even crazier, like "a business with a significant California business."
coliveira 6y ago
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.
- koolba 6y ago
  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.
  - coliveira 6y ago
    This is just a detail. The city creates the tax so they can change it any way they want.
    - koolba 6y ago
      > 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-york-city-photos-2019-4 https://www.businessinsider.com/jeff-bezos-apartments-new-yo...
  - nieksand 6y ago
    You'll still have to pay NY state taxes if you're a telecommuter, even if you do not set foot in the state.
ed25519FUUU 6y ago
I just hope the fallout doesn’t “fall out” before I get a chance to move first!
d3ad1ysp0rk 6y ago
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 https://ballotpedia.org/Total_state_government_expenditures
qppo 6y ago
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.
fzeroracer 6y ago
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.
- rhexs 6y ago
  While I understand this was most likely posted in a fit of brief anger, the non-coastal areas are not a desolate wasteland.
  - fzeroracer 6y ago
    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.
    - DevKoala 6y ago
      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.
    - nitrogen 6y ago
      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.

cptroot 6y ago

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

proverbialbunny 6y ago
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.
badfrog 6y ago
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.
- steffan 6y ago
  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)
  - vitus 6y ago
    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.
  - jstepka 6y ago
    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.
- bsharitt 6y ago
  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.
beaner 6y ago
Would be interesting to hear the answer if anyone knows it.
- azimuth11 6y ago
  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.
- ghaff 6y ago
  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).
steffan 6y ago
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.
- qppo 6y ago
  After MD v Wynne, I think they'd have to give tax credits to income tax paid in other states if they tried that.
  - ninkendo 6y ago
    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.
- closeparen 6y ago
  Tech companies are Deleware businesses, though. You'd have to do something even crazier, like "a business with a significant California business."

coliveira 6y ago

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.

koolba 6y ago
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.
- coliveira 6y ago
  This is just a detail. The city creates the tax so they can change it any way they want.
  - koolba 6y ago
    > 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-york-city-photos-2019-4 https://www.businessinsider.com/jeff-bezos-apartments-new-yo...
- nieksand 6y ago
  You'll still have to pay NY state taxes if you're a telecommuter, even if you do not set foot in the state.

ed25519FUUU 6y ago

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

d3ad1ysp0rk 6y ago

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 https://ballotpedia.org/Total_state_government_expenditures

qppo 6y ago

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.

fzeroracer 6y ago

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.

rhexs 6y ago
While I understand this was most likely posted in a fit of brief anger, the non-coastal areas are not a desolate wasteland.
- fzeroracer 6y ago
  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.
  - DevKoala 6y ago
    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.
  - nitrogen 6y ago
    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.