4 ms·

My reality is that nobody smart and wealthy that bothers to read or hire a CPA and lawyer actually is encumbered by California's "high taxes and onerous complia

My reality is that nobody smart and wealthy that bothers to read or hire a CPA and lawyer actually is encumbered by California's "high taxes and onerous compliance". So yeah, sure an obvious counter example is of W-2 employees at a FAANG are smart and wealthy, but many of them don't bother to look and have few ways of lowering their taxes, but people playing around with capital have plenty of ways. This leaves a poorer class of people (in California and all across the country) that make too little to actually be encumbered by California taxes and also are not doing anything to trigger compliance measures on themselves while merely imagining its high taxes, and a richer class of people that can route around it like always and enjoy everything attractive about California.

whimsicalism 4y ago
? I agree that the second point you made refutes the first point you made. I make a lot of money, pay a lot in taxes, and do not have "obvious ways of routing around it" outside of a mega-backdoor roth.
- vmception 4y ago
  they have to be smart && wealthy && bother to do things to nullify taxes, my second point made an example of smart && wealthy && !bothering to do thing to nullify taxes
  - whimsicalism 4y ago
    There are no ez ways for W2 FAANG employees to "route around taxes."
    - vmception 4y ago
      yeah thats what I said. glad we agree.
rmk 4y ago
CA FTB is hard to dodge even for capital gains. Basically, if you have ever lived in California for anything other than a "temporary or transitory purpose", you are at least a part-time resident, likely a resident. Ergo, you owe CA's silly taxes, including on Capital Gains, and CA's own version of AMT (and no, CA does not recognize many taxation agreements that are federally recognized!). Basically, if the FTB decides to throw the book at you, you are toast. https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf
- vmception 4y ago
  Right. Anything that gets your AGI (adjusted gross income) low that year nullifies whatever California is looking for too. So expense everything because you're building something revenue producing and spending towards that, trade 1256 contracts more often instead of just random stocks/ETFs willynilly (ie. $SPX options instead of $SPY options, because you actually know what you're trading), tax loss harvest aggressively, borrow against assets to begin with, spend the borrowed or outside capital on the expensable things (you owe whoever you borrowed from - eventually - but not the government, and in some cases can deduct the interest as well). Spend more than you earned that year and you have no tax to pay, achievable via having savings or outside capital to spend. Boost up assets in tax deferred and tax exempt accounts, the usual. Its easy to stagger the tax events across years, such that there is always a counteracting force mitigating taxes during that current year. The government makes an incentive to transact in certain ways, the velocity of transactions is more important for the economy than taxes, when you fail to do that the government takes a cut of the remainder. (This is true of income and some other taxes, while other forms of taxes support very specific programs directly, and are much smaller)

whimsicalism 4y ago

? I agree that the second point you made refutes the first point you made. I make a lot of money, pay a lot in taxes, and do not have "obvious ways of routing around it" outside of a mega-backdoor roth.

vmception 4y ago
they have to be smart && wealthy && bother to do things to nullify taxes, my second point made an example of smart && wealthy && !bothering to do thing to nullify taxes
- whimsicalism 4y ago
  There are no ez ways for W2 FAANG employees to "route around taxes."
  - vmception 4y ago
    yeah thats what I said. glad we agree.

rmk 4y ago

CA FTB is hard to dodge even for capital gains. Basically, if you have ever lived in California for anything other than a "temporary or transitory purpose", you are at least a part-time resident, likely a resident. Ergo, you owe CA's silly taxes, including on Capital Gains, and CA's own version of AMT (and no, CA does not recognize many taxation agreements that are federally recognized!). Basically, if the FTB decides to throw the book at you, you are toast. https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf

vmception 4y ago
Right. Anything that gets your AGI (adjusted gross income) low that year nullifies whatever California is looking for too. So expense everything because you're building something revenue producing and spending towards that, trade 1256 contracts more often instead of just random stocks/ETFs willynilly (ie. $SPX options instead of $SPY options, because you actually know what you're trading), tax loss harvest aggressively, borrow against assets to begin with, spend the borrowed or outside capital on the expensable things (you owe whoever you borrowed from - eventually - but not the government, and in some cases can deduct the interest as well). Spend more than you earned that year and you have no tax to pay, achievable via having savings or outside capital to spend. Boost up assets in tax deferred and tax exempt accounts, the usual. Its easy to stagger the tax events across years, such that there is always a counteracting force mitigating taxes during that current year. The government makes an incentive to transact in certain ways, the velocity of transactions is more important for the economy than taxes, when you fail to do that the government takes a cut of the remainder. (This is true of income and some other taxes, while other forms of taxes support very specific programs directly, and are much smaller)