7 ms·

Perhaps it's naive of me, but I can't help but look down on this kind of behavior. I know that tax money is rarely spent in the most efficient way possible, but

Perhaps it's naive of me, but I can't help but look down on this kind of behavior. I know that tax money is rarely spent in the most efficient way possible, but (ideally) the point of taxes is that they go to benefit the general public. Moving just so one doesn't have to pay as much, after (presumably) living in the state for some time feels selfish and greedy.

throwaway1777 6y ago
Of course it’s greedy, but on the other hand wouldn’t you be crazy to not try to get out of paying millions in taxes?
- Johnny555 6y ago
  Though it's not millions in this case, the top marginal tax rate in CA is 12%, so he's saving at most $850K if this was a one-time $7M payment. Not sure that 12% is worth picking up my family and moving to another state if that's the only reason to relocate. CA and WA weather and lifestyle is much different than what he saw in Southern California (I'm guessing that's where he lived since he was in the music industry). I made that move (from SF Bay Area to Seattle) about 5 years ago (but for work, not taxes), and I'm thinking about going back to CA for the milder winters.
  - throwaway1777 6y ago
    850k is worth moving to another state for a year, especially if this is not repeatable income, but that’s just me.
    - Johnny555 6y ago
      I think it'd have to be more than a year if you really want to escape taxation. If you leave the state, earn $7M, then move back a year later, California is going to be taking a close look at when you actually earned that money. Though moving is easier and cheaper for a single person living in an apartment than someone with a family and house.
      - sushid 6y ago
        If it's legit, why does it matter? Presumably that person's song took off and they were able to forecast that they'd make $X, which was worth the move to WA.
        Johnny555 6y ago
        If he's moving to escape taxation, it's not legit (in the eyes of the Franchise Tax Board), and if he did the work while he was living in California, they're going to want (and almost certainly will get) their share.
  - vmception 6y ago
    You only have to relocate for a maximum 6 months and 1 day. As in, your US address needs to be in the lower tax state. So, if its after June when your windfall hits, that particular option is removed and you have to focus on offsetting deductions. But it resets January 1, every year :)
- Varriount 6y ago
  No, because (again, ideally) those taxes are going to be used to benefit the common good. Trying to get out of paying them would be like saying, "of course I should get help from everyone else for education, housing, infrastructure, etc., but goodness forbid I actually return the favor later on so that others get the same benefit!" Anyway, it's not like such taxes take away so much of your earnings that you're left with a pittance. At some point you have to ask yourself, "is the amount of happiness I gain from keeping this amount of money worth more than the various things it will be spent on, and the benefit it will give to others?" (I'm reminded of the Simpsons episode, "The Last of The Red Hat Mamas, where Mr Burns pledges to donate money to a children's hospital, but then uses it extend his own life instead - by 10 minutes[0]) It's a sign of the sad state of things that taxes are treated more like throwing money away, than being a resource used for the common good. [0] https://youtu.be/-Icbia3fDuY?t=45 https://youtu.be/-Icbia3fDuY?t=45
kmeisthax 6y ago
Some states actually have laws specifically to prevent this. For example, if you work remote for a company based in NY, PA, CT, DE, AR, or NE; your income is taxable in that state regardless of where you live or work. This is known as a "convenience of the employer" test. In fact, before a certain SCOTUS ruling you couldn't even claim a refund on that tax for your residence state's tax return (and even after, that refund is taxable). California is already considering a wealth exit tax that would apply 10 years worth of tax nexus to anyone who leaves the state. I'd complain about this more, as it goes against the whole concept of freedom of movement... but the US already does the same thing. Emigrate from the US and you'll still be expected to pay US taxes on foreign income. I've heard there's a rule that exempts you from said taxes if you spend the entire tax year outside the US. Some people also take the really risky step of throwing out their US citizenship... which is actually grounds to be permanently banned from entering the US for any reason if they find out that you did so for tax purposes.
- jdmichal 6y ago
  I worked for a company based in NY and had to certify every year that I worked in NY state for less than 10 days a year. If I couldn't make that certification, then I would have owed the state taxes.
- kbenson 6y ago
  > Emigrate from the US and you'll still be expected to pay US taxes on foreign income. That's because you still have U.S. citizenship. You can give that up and not be taxed, as I understand it. Also, it looks like there are provisions to give you exclusions on your foreign income,if you have any.[1] That seems sane to me, if you live their the whole year and that location is your tax base, then you can exclude all the income from their in your U.S. taxes. But living elsewhere won't protect you from U.S. taxes if you still have the benefit of U.S. citizenship and make a lot of money from the U.S. California considering a wealth exit tax seems a bit different on first glance, but I could see it making sense if it's somewhat similar in use. If you make your money from California and continue to after moving from there to elsewhere, that money being eligible to be taxed by California because otherwise it's extracting the benefit of California's laws and markets without paying into the system that provides them. 1: https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...
Lammy 6y ago
Have you ever worked for a Delaware corporation in a state other than Delaware?
vmception 6y ago
If you've ever driven to a different county to get cheaper gas, or chose a house in a certain municipality to get a lower property tax, or purchased nearby for a lower sales tax, or didn't compute it yourself to send to your state after an online purchase, it's the exact same thing. This has been reinforced by the Supreme Court who could find no distinction between any socioeconomic class optimizing their tax burden, no matter how accessible the privilege becomes for some. > Perhaps it's naive of me, I think it would be considered naive to elevate the greed of the state over the greed of an individual. Your current train of thought doesn't seem to factor it in at all, it seems more like "if this kind of authority asks, because I respect it, I must comply" which makes me wonder where the limits are. Any state? Any due process outcome? Any percentage? Would you consider to read the state's law to discover that you are not subjected to the payment in many circumstances that you can create? To me, thats where the naivete lies. My current thoughts on taxes are that the state incentivizes certain kinds of transactions. And if you don't engage in those kind of transactions then the state taxes a percentage of the remainder. The percentage of the tax being a deterrent, as it would prefer you put your money to use in other ways so that you never pay it. Spending, investments, etc. Which this logic its not about imagining that you are passively paying for roads and schools (you aren't, you are paying interest on the funds the state borrowed from the international markets to pay for the roads and schools that were already going to be paid for regardless, the ones that would be neglected would still be neglected). This is most directly seen with the old healthcare fine: if you don't have healthcare through an employer and don't pay for the affordable care act plan then you pay a $1,000 tax. They are incentivizing you to shift capital to certain areas of the economy, with the fallback being the state. This will be a more productive way for you to think of all transactions with the state.
- Varriount 6y ago
  > Any state? Any due process outcome? Any percentage? My original comment does not state my opinions on these parameters of the taxation process. I was commenting on how I felt the act of moving to a new state, just to get out of paying taxes in the state you currently live in (and earned that money in), is, in general, immoral. I could have spent several paragraphs going over every possible exception to this viewpoint, and hedge every assertion with "in general", "except when", etc., but that tends to be tedious to both read and write. > Would you consider to read the state's law to discover that you are not subjected to the payment in many circumstances that you can create? > Which this logic its not about imagining that you are passively paying for roads and schools Could you restate these sentences? I can't quite understand them.
s1artibartfast 6y ago
It really depends on your priors. If you think California is lighting the money on fire or taxes are theft, it is pretty easy to justify.
hellbannedguy 6y ago
I would allow them to move to avoid paying less, but put a 15 year time limit on moving back. If you move back before, you pay the original tax? The same for corporations who move to the lowest taxed country. Apple wants to pay Irish tax rates, then pack up CEO, CFO, and all employees in management positions and move to Ireland and Zoom. Your troops can stay here. (Your first few big pay days should be exempt from all taxes though, especially if you can prove your were poor, or middle class in the previous 10 years? I’ve never felt it was fair for a guy whom got lucky in business, or life, having to pay a big tax; especially if they were scraping by in previous years. Am I saying the poor unemployed guy who one the lottery shouldn’t have to pay any tax on that first lottery win in life, or business—-yes. Our social safety net is so terrible here, it can’t be an excuse to tax new found wealth. America does not help out it’s poor well enough to tax those first few big pay days.)
- _carbyau_ 6y ago
  This is where payment plans come in. Instead of lump sum taxed as such. Have a portion per year taxed at the lower threshold. But how you arrange doing that within your business framework is hard. I agree that tax system should take individual person constancy of income into account.
honkdaddy 6y ago
I don't see any moral qualms with opting to pay the least amount of taxes you legally can for the same reason I don't see any moral victory in choosing to pay more than you're obligated. When my accountant tells me to sign here and here to save myself a few thousands a year, I don't ask him "wouldn't these few thousand dollars benefit the general public?" I keep what I earned because I know that if the table's were turned, the state would never choose to give me more than I'm owed either.

throwaway1777 6y ago

Of course it’s greedy, but on the other hand wouldn’t you be crazy to not try to get out of paying millions in taxes?

Johnny555 6y ago
Though it's not millions in this case, the top marginal tax rate in CA is 12%, so he's saving at most $850K if this was a one-time $7M payment. Not sure that 12% is worth picking up my family and moving to another state if that's the only reason to relocate. CA and WA weather and lifestyle is much different than what he saw in Southern California (I'm guessing that's where he lived since he was in the music industry). I made that move (from SF Bay Area to Seattle) about 5 years ago (but for work, not taxes), and I'm thinking about going back to CA for the milder winters.
- throwaway1777 6y ago
  850k is worth moving to another state for a year, especially if this is not repeatable income, but that’s just me.
  - Johnny555 6y ago
    I think it'd have to be more than a year if you really want to escape taxation. If you leave the state, earn $7M, then move back a year later, California is going to be taking a close look at when you actually earned that money. Though moving is easier and cheaper for a single person living in an apartment than someone with a family and house.
    - sushid 6y ago
      If it's legit, why does it matter? Presumably that person's song took off and they were able to forecast that they'd make $X, which was worth the move to WA.
      - Johnny555 6y ago
        If he's moving to escape taxation, it's not legit (in the eyes of the Franchise Tax Board), and if he did the work while he was living in California, they're going to want (and almost certainly will get) their share.
- vmception 6y ago
  You only have to relocate for a maximum 6 months and 1 day. As in, your US address needs to be in the lower tax state. So, if its after June when your windfall hits, that particular option is removed and you have to focus on offsetting deductions. But it resets January 1, every year :)
Varriount 6y ago
No, because (again, ideally) those taxes are going to be used to benefit the common good. Trying to get out of paying them would be like saying, "of course I should get help from everyone else for education, housing, infrastructure, etc., but goodness forbid I actually return the favor later on so that others get the same benefit!" Anyway, it's not like such taxes take away so much of your earnings that you're left with a pittance. At some point you have to ask yourself, "is the amount of happiness I gain from keeping this amount of money worth more than the various things it will be spent on, and the benefit it will give to others?" (I'm reminded of the Simpsons episode, "The Last of The Red Hat Mamas, where Mr Burns pledges to donate money to a children's hospital, but then uses it extend his own life instead - by 10 minutes[0]) It's a sign of the sad state of things that taxes are treated more like throwing money away, than being a resource used for the common good. [0] https://youtu.be/-Icbia3fDuY?t=45 https://youtu.be/-Icbia3fDuY?t=45

kmeisthax 6y ago

Some states actually have laws specifically to prevent this. For example, if you work remote for a company based in NY, PA, CT, DE, AR, or NE; your income is taxable in that state regardless of where you live or work. This is known as a "convenience of the employer" test. In fact, before a certain SCOTUS ruling you couldn't even claim a refund on that tax for your residence state's tax return (and even after, that refund is taxable). California is already considering a wealth exit tax that would apply 10 years worth of tax nexus to anyone who leaves the state. I'd complain about this more, as it goes against the whole concept of freedom of movement... but the US already does the same thing. Emigrate from the US and you'll still be expected to pay US taxes on foreign income. I've heard there's a rule that exempts you from said taxes if you spend the entire tax year outside the US. Some people also take the really risky step of throwing out their US citizenship... which is actually grounds to be permanently banned from entering the US for any reason if they find out that you did so for tax purposes.

jdmichal 6y ago
I worked for a company based in NY and had to certify every year that I worked in NY state for less than 10 days a year. If I couldn't make that certification, then I would have owed the state taxes.
kbenson 6y ago
> Emigrate from the US and you'll still be expected to pay US taxes on foreign income. That's because you still have U.S. citizenship. You can give that up and not be taxed, as I understand it. Also, it looks like there are provisions to give you exclusions on your foreign income,if you have any.[1] That seems sane to me, if you live their the whole year and that location is your tax base, then you can exclude all the income from their in your U.S. taxes. But living elsewhere won't protect you from U.S. taxes if you still have the benefit of U.S. citizenship and make a lot of money from the U.S. California considering a wealth exit tax seems a bit different on first glance, but I could see it making sense if it's somewhat similar in use. If you make your money from California and continue to after moving from there to elsewhere, that money being eligible to be taxed by California because otherwise it's extracting the benefit of California's laws and markets without paying into the system that provides them. 1: https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...

Lammy 6y ago

Have you ever worked for a Delaware corporation in a state other than Delaware?

vmception 6y ago

If you've ever driven to a different county to get cheaper gas, or chose a house in a certain municipality to get a lower property tax, or purchased nearby for a lower sales tax, or didn't compute it yourself to send to your state after an online purchase, it's the exact same thing. This has been reinforced by the Supreme Court who could find no distinction between any socioeconomic class optimizing their tax burden, no matter how accessible the privilege becomes for some. > Perhaps it's naive of me, I think it would be considered naive to elevate the greed of the state over the greed of an individual. Your current train of thought doesn't seem to factor it in at all, it seems more like "if this kind of authority asks, because I respect it, I must comply" which makes me wonder where the limits are. Any state? Any due process outcome? Any percentage? Would you consider to read the state's law to discover that you are not subjected to the payment in many circumstances that you can create? To me, thats where the naivete lies. My current thoughts on taxes are that the state incentivizes certain kinds of transactions. And if you don't engage in those kind of transactions then the state taxes a percentage of the remainder. The percentage of the tax being a deterrent, as it would prefer you put your money to use in other ways so that you never pay it. Spending, investments, etc. Which this logic its not about imagining that you are passively paying for roads and schools (you aren't, you are paying interest on the funds the state borrowed from the international markets to pay for the roads and schools that were already going to be paid for regardless, the ones that would be neglected would still be neglected). This is most directly seen with the old healthcare fine: if you don't have healthcare through an employer and don't pay for the affordable care act plan then you pay a $1,000 tax. They are incentivizing you to shift capital to certain areas of the economy, with the fallback being the state. This will be a more productive way for you to think of all transactions with the state.

Varriount 6y ago
> Any state? Any due process outcome? Any percentage? My original comment does not state my opinions on these parameters of the taxation process. I was commenting on how I felt the act of moving to a new state, just to get out of paying taxes in the state you currently live in (and earned that money in), is, in general, immoral. I could have spent several paragraphs going over every possible exception to this viewpoint, and hedge every assertion with "in general", "except when", etc., but that tends to be tedious to both read and write. > Would you consider to read the state's law to discover that you are not subjected to the payment in many circumstances that you can create? > Which this logic its not about imagining that you are passively paying for roads and schools Could you restate these sentences? I can't quite understand them.

s1artibartfast 6y ago

It really depends on your priors. If you think California is lighting the money on fire or taxes are theft, it is pretty easy to justify.

hellbannedguy 6y ago

I would allow them to move to avoid paying less, but put a 15 year time limit on moving back. If you move back before, you pay the original tax? The same for corporations who move to the lowest taxed country. Apple wants to pay Irish tax rates, then pack up CEO, CFO, and all employees in management positions and move to Ireland and Zoom. Your troops can stay here. (Your first few big pay days should be exempt from all taxes though, especially if you can prove your were poor, or middle class in the previous 10 years? I’ve never felt it was fair for a guy whom got lucky in business, or life, having to pay a big tax; especially if they were scraping by in previous years. Am I saying the poor unemployed guy who one the lottery shouldn’t have to pay any tax on that first lottery win in life, or business—-yes. Our social safety net is so terrible here, it can’t be an excuse to tax new found wealth. America does not help out it’s poor well enough to tax those first few big pay days.)

_carbyau_ 6y ago
This is where payment plans come in. Instead of lump sum taxed as such. Have a portion per year taxed at the lower threshold. But how you arrange doing that within your business framework is hard. I agree that tax system should take individual person constancy of income into account.

honkdaddy 6y ago

I don't see any moral qualms with opting to pay the least amount of taxes you legally can for the same reason I don't see any moral victory in choosing to pay more than you're obligated. When my accountant tells me to sign here and here to save myself a few thousands a year, I don't ask him "wouldn't these few thousand dollars benefit the general public?" I keep what I earned because I know that if the table's were turned, the state would never choose to give me more than I'm owed either.