5 ms·

> Despite TX lacking a state income tax, most Texans pay more in taxes than CA. This is pretty misleading. The report in question doesn't say whether Texans or

> Despite TX lacking a state income tax, most Texans pay more in taxes than CA. This is pretty misleading. The report in question doesn't say whether Texans or California's actually pay more per capita - it's entirely as a percentage of the total state tax collected. https://itep.org/whopays/ https://itep.org/whopays/ (EDIT: This isn't correct, it's as percentage of income by average income in state, but the brackets are different per state). So it's because they are missing an income tax. But if someone hit you with a 50% income tax next year, you wouldn't consider your tax bill lower just because your share become proportionally smaller. With that in mind, per capita tax in California is ~$6800 and in Texas it's $4400. FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them. The exodus to Texas has less to do with taxes and much more to do with general cost of living, which is still largely a function of state government.

paxys 4y ago
> The report in question doesn't say whether Texans or California's actually pay more per capita - it's entirely as a percentage of the total state tax collected The graph shows what percentage of their income people pay towards state and local taxes.
- legitster 4y ago
  Okay, good point. But these brackets are also a bit misleading, since in the ITEP data they are relative to each state. The lowest bracket in the ITEP data for California tops out at $23k, but it's only ~$20k for Texas. Meanwhile, the middle bracket in California tops out at $62k, while Texas it's only $58k. So again, the sales tax could be the exact same in both states, but it would show up as larger percentage of budget because people in Texas are poorer on average.
  - paxys 4y ago
    Yes, but that's the point of the article. Earning $1000 and paying $500 of it towards taxes is more regressive than earning $2000 and paying $800, even though in the second case you are paying more in terms of absolute dollars.
Ferrotin 4y ago
Phil Mickelson and Tiger Woods are an example of each. Many others, some entrepreneurs who post on HN, hopped out of California before taking a capital gain. I think that also might be why Amazon is in Washington, but possibly that was just sales tax and California’s large population.
- pyuser583 4y ago
  For Amazon it was California’s sales tax.
  - lotsofpulp 4y ago
    Not specifically California’s sales tax in and of itself, but the fact that California has a huge population that Amazon would have had to collect sales tax for. https://www.fastcompany.com/27309/whos-writing-book-web-business https://www.fastcompany.com/27309/whos-writing-book-web-busi... >You moved from New York to Seattle to start this business. Why? >It sounds counterintuitive, but physical location is very important for the success of a virtual business. We could have started Amazon.com anywhere. We chose Seattle because it met a rigorous set of criteria. It had to be a place with lots of technical talent. It had to be near a place with large numbers of books. It had to be a nice place to live — great people won’t work in places they don’t want to live. Finally, it had to be in a small state. In the mail-order business, you have to charge sales tax to customers who live in any state where you have a business presence. It made no sense for us to be in California or New York. Pretty genius to recognize the pricing advantage from people evading sales and use tax in the cutthroat retail business which was unable to be exploited as easily before the internet.
    - pyuser583 4y ago
      That was the exact quote I was thinking of! I recently listened to the Acquired podcasts 4 hour long episode on Amazon.
philiphodgen 4y ago
> FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them. Because you don't know where to look, or what you're seeing. Source: am tax lawyer. In California. Have seen and helped individuals with hundreds of millions in annual income escape to other places.
- jessfyi 4y ago
  I mean your "data" will be particularly skewed towards one end of the argument seeing as you deal with people with millions and are literally incentivized to note it as a bigger problem than it is. Differences in housing and job availability are bigger differentiating factors when "normal" people decide to move.
- guelo 4y ago
  > hundreds of millions in annual income I've never understood the level of greed required to be that rich and be so worried about paying your taxes.
  - ryandrake 4y ago
    Almost everyone I socialize with (45+) plans to at least leave CA when they retire, if not earlier. A few have already left. Most have their sights set on Nevada, Texas or Florida. One of them already has property in Wyoming, just waiting a few more years. These places all have one thing in common. These are not rich people, they're all middle class working schmucks like me, who simply aren't convinced that they're getting more value for their tax dollar than they're paying.
    - guelo 4y ago
      Not sure what this has to do with my comment.
shkkmo 4y ago
You see to have misunderstood a couple of things. Those numbers are not ”a percentage of total taxes” but are a percentage of a person's income. Comparing per capita taxes tells you more about per capita income rather than relative taxation rates. The whole point is that the average texan pays a higher percentage of their income in state taxes than the average californian and Texas taxes are more regressive.
- legitster 4y ago
  Corrected! Though it's worth pointing out that the source is not correct either - the ITEP brackets are different per state - so at a given income you probably do pay less in Texas (you're just more likely to be poorer if you live in Texas).
  - shkkmo 4y ago
    The different tax brackets do make things more confusing, but You still seem to be looking at the data and seeing things that simply aren't there. The numbers show that a poor person in Texas pays more than a poor person in California with the same income. The average income of the bottom 20% is 13,000 and they pay an average of 13% in total taxes for an average tax burden of 1690. The average income of the bottom 20% in California is 14,300 and they pay an average of 10.5% in total taxes for an averagr tax burden of 1501.5 Thus the bottom 20% in Texas not only make less money but then also have to pay more total taxes than their higher income counterpart in California. For poor people Texas is a higher tax state than California.
danielrpa 4y ago
I left California to another state because of, among other things, unfair and crushing taxation. I am a software engineer with good pay but not millions or anything like that. Nice to meet you!
rsync 4y ago
"FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them." Allow me to be the first - with both a philosophical and a practical critique. First, philosophical: The highest marginal tax rate in California is 13.3% which, combined with the maximum marginal federal rate of 37%, crosses an anchor point, or threshold, that I mentally hold of greater than half. You see, I consider tax rates to be largely arbitrary - I cannot affix any particular value judgement on, say, 18% vs 22% vs 27% tax rates. They seem equally reasonable, on principle ... they seem arbitrary to me ... ... until they are greater than half.[1] This is my personal feeling. Second, a practical critique: I have no problem with high tax rates - provided I get high value for my taxpayer dollar. If the trains all run on time and the power is on and everything looks like Zurich (the Canton) then please, do indeed, subject me to high tax rates. Conversely, if things look like California circa 2022 I'd be reasonable content with (some lower, obviously arbitrary) tax rate. As it stands, we get the worst of both worlds: relatively high (globally!) tax rates, no trains at all (never mind being on time) and spotty electricity ... among other things. [1] Cue the misunderstood, misinterpreted retelling of sky-high marginal tax rates from the end of world war 2. These were war profiteering policies and had nothing to do with policies of progressive taxation as we think of them. It is incorrect, for instance, to compare the 95% excess profits tax of 1943 with tax rates in our modern era: https://en.wikipedia.org/wiki/Excess_profits_tax https://en.wikipedia.org/wiki/Excess_profits_tax
- bhupy 4y ago
  Generally agree with most of what you're saying, it's the Tiebout model (https://en.wikipedia.org/wiki/Tiebout_model https://en.wikipedia.org/wiki/Tiebout_model). > The model holds that if municipalities offered varying baskets of goods (government services) at a variety of prices (tax rates), that people with different personal valuations of these services and prices would move from one local community to another which maximizes their personal utility. My only quip is that the marginal rate doesn't apply on every single dollar, so while it's true that after a certain dollar threshold, every incremental dollar is taxed at greater than half, your net effective rate remains well below half, for whatever that's worth.
- pyuser583 4y ago
yellowapple 4y ago
> FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them. Howdy! Nice you meet you! Yes, there were other factors (like general cost of living, the more interesting weather, and me liking guns and not liking California's policies regarding them), but the reduction in income taxes was indeed a motivator for me hopping the California/Nevada border.
anon291 4y ago
I mean both my parents and I did. I was born in California and left all my friends and family. Simply too expensive. Too many taxes and always increasing. My guess is that you're not spending time with the right Californians. It was a very common complaint. My best friend in high school also moved to a lower tax state.

paxys 4y ago

> The report in question doesn't say whether Texans or California's actually pay more per capita - it's entirely as a percentage of the total state tax collected The graph shows what percentage of their income people pay towards state and local taxes.

legitster 4y ago
Okay, good point. But these brackets are also a bit misleading, since in the ITEP data they are relative to each state. The lowest bracket in the ITEP data for California tops out at $23k, but it's only ~$20k for Texas. Meanwhile, the middle bracket in California tops out at $62k, while Texas it's only $58k. So again, the sales tax could be the exact same in both states, but it would show up as larger percentage of budget because people in Texas are poorer on average.
- paxys 4y ago
  Yes, but that's the point of the article. Earning $1000 and paying $500 of it towards taxes is more regressive than earning $2000 and paying $800, even though in the second case you are paying more in terms of absolute dollars.

Ferrotin 4y ago

Phil Mickelson and Tiger Woods are an example of each. Many others, some entrepreneurs who post on HN, hopped out of California before taking a capital gain. I think that also might be why Amazon is in Washington, but possibly that was just sales tax and California’s large population.

pyuser583 4y ago
For Amazon it was California’s sales tax.
- lotsofpulp 4y ago
  Not specifically California’s sales tax in and of itself, but the fact that California has a huge population that Amazon would have had to collect sales tax for. https://www.fastcompany.com/27309/whos-writing-book-web-business https://www.fastcompany.com/27309/whos-writing-book-web-busi... >You moved from New York to Seattle to start this business. Why? >It sounds counterintuitive, but physical location is very important for the success of a virtual business. We could have started Amazon.com anywhere. We chose Seattle because it met a rigorous set of criteria. It had to be a place with lots of technical talent. It had to be near a place with large numbers of books. It had to be a nice place to live — great people won’t work in places they don’t want to live. Finally, it had to be in a small state. In the mail-order business, you have to charge sales tax to customers who live in any state where you have a business presence. It made no sense for us to be in California or New York. Pretty genius to recognize the pricing advantage from people evading sales and use tax in the cutthroat retail business which was unable to be exploited as easily before the internet.
  - pyuser583 4y ago
    That was the exact quote I was thinking of! I recently listened to the Acquired podcasts 4 hour long episode on Amazon.

philiphodgen 4y ago

> FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them. Because you don't know where to look, or what you're seeing. Source: am tax lawyer. In California. Have seen and helped individuals with hundreds of millions in annual income escape to other places.

jessfyi 4y ago
I mean your "data" will be particularly skewed towards one end of the argument seeing as you deal with people with millions and are literally incentivized to note it as a bigger problem than it is. Differences in housing and job availability are bigger differentiating factors when "normal" people decide to move.
guelo 4y ago
> hundreds of millions in annual income I've never understood the level of greed required to be that rich and be so worried about paying your taxes.
- ryandrake 4y ago
  Almost everyone I socialize with (45+) plans to at least leave CA when they retire, if not earlier. A few have already left. Most have their sights set on Nevada, Texas or Florida. One of them already has property in Wyoming, just waiting a few more years. These places all have one thing in common. These are not rich people, they're all middle class working schmucks like me, who simply aren't convinced that they're getting more value for their tax dollar than they're paying.
  - guelo 4y ago
    Not sure what this has to do with my comment.

shkkmo 4y ago

You see to have misunderstood a couple of things. Those numbers are not ”a percentage of total taxes” but are a percentage of a person's income. Comparing per capita taxes tells you more about per capita income rather than relative taxation rates. The whole point is that the average texan pays a higher percentage of their income in state taxes than the average californian and Texas taxes are more regressive.

legitster 4y ago
Corrected! Though it's worth pointing out that the source is not correct either - the ITEP brackets are different per state - so at a given income you probably do pay less in Texas (you're just more likely to be poorer if you live in Texas).
- shkkmo 4y ago
  The different tax brackets do make things more confusing, but You still seem to be looking at the data and seeing things that simply aren't there. The numbers show that a poor person in Texas pays more than a poor person in California with the same income. The average income of the bottom 20% is 13,000 and they pay an average of 13% in total taxes for an average tax burden of 1690. The average income of the bottom 20% in California is 14,300 and they pay an average of 10.5% in total taxes for an averagr tax burden of 1501.5 Thus the bottom 20% in Texas not only make less money but then also have to pay more total taxes than their higher income counterpart in California. For poor people Texas is a higher tax state than California.

danielrpa 4y ago

I left California to another state because of, among other things, unfair and crushing taxation. I am a software engineer with good pay but not millions or anything like that. Nice to meet you!

rsync 4y ago

"FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them." Allow me to be the first - with both a philosophical and a practical critique. First, philosophical: The highest marginal tax rate in California is 13.3% which, combined with the maximum marginal federal rate of 37%, crosses an anchor point, or threshold, that I mentally hold of greater than half. You see, I consider tax rates to be largely arbitrary - I cannot affix any particular value judgement on, say, 18% vs 22% vs 27% tax rates. They seem equally reasonable, on principle ... they seem arbitrary to me ... ... until they are greater than half.[1] This is my personal feeling. Second, a practical critique: I have no problem with high tax rates - provided I get high value for my taxpayer dollar. If the trains all run on time and the power is on and everything looks like Zurich (the Canton) then please, do indeed, subject me to high tax rates. Conversely, if things look like California circa 2022 I'd be reasonable content with (some lower, obviously arbitrary) tax rate. As it stands, we get the worst of both worlds: relatively high (globally!) tax rates, no trains at all (never mind being on time) and spotty electricity ... among other things. [1] Cue the misunderstood, misinterpreted retelling of sky-high marginal tax rates from the end of world war 2. These were war profiteering policies and had nothing to do with policies of progressive taxation as we think of them. It is incorrect, for instance, to compare the 95% excess profits tax of 1943 with tax rates in our modern era: https://en.wikipedia.org/wiki/Excess_profits_tax https://en.wikipedia.org/wiki/Excess_profits_tax

bhupy 4y ago
Generally agree with most of what you're saying, it's the Tiebout model (https://en.wikipedia.org/wiki/Tiebout_model https://en.wikipedia.org/wiki/Tiebout_model). > The model holds that if municipalities offered varying baskets of goods (government services) at a variety of prices (tax rates), that people with different personal valuations of these services and prices would move from one local community to another which maximizes their personal utility. My only quip is that the marginal rate doesn't apply on every single dollar, so while it's true that after a certain dollar threshold, every incremental dollar is taxed at greater than half, your net effective rate remains well below half, for whatever that's worth.
pyuser583 4y ago

yellowapple 4y ago

> FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them. Howdy! Nice you meet you! Yes, there were other factors (like general cost of living, the more interesting weather, and me liking guns and not liking California's policies regarding them), but the reduction in income taxes was indeed a motivator for me hopping the California/Nevada border.

anon291 4y ago

I mean both my parents and I did. I was born in California and left all my friends and family. Simply too expensive. Too many taxes and always increasing. My guess is that you're not spending time with the right Californians. It was a very common complaint. My best friend in high school also moved to a lower tax state.