4 ms·

Counterintuitively, but very logically as the market just compensates when you think about it, the higher the taxes the higher the pay gap.

jltsiren 2y ago
The pay gap discussed in the article is more about low wages than high wages. The 75th percentile is the third highest in the country, but the gap between that and the 25th percentile is the largest. In other words, the gap is more about people making less than $40k than about people making over $90k.
xnyan 2y ago
The effective state and local tax rate is ~12.5% in Texas and 9.6% in California.
- pton_xd 2y ago
  Having lived in both California and Texas I have to say, that's a stretch. What data is backing up those numbers? Does that include sales tax, gas tax, utility tax, car registration fees, and every other form of state tax?
  - mym1990 2y ago
    Not sure what "effective" tax rate means, but 9.6% seems accurate to me for income tax only, and can go up to 12%. Sales tax is like 7 something, and all the other taxes are all over the place.
    - pton_xd 2y ago
      Right but the Texas income tax rate is 0% and the sales tax is 6.25%. So I'm curious how they arrived at a 12.5% vs 9.6% effective tax rate.
      - silverquiet 2y ago
        Speaking as a Texan, Texas has plenty of ways to tax you. My favorite is the punitive registration fees they recently added to electric cars.
        pton_xd 2y ago
        Better than California requiring 0.65% of your vehicle value every year in licensing fees. Washington state also added a yearly EV registration fee. Their argument is the gas tax pays for road maintenance, but EVs don't consume gas, so they need some other way of extracting money from those owners.
        paulryanrogers 2y ago
        EVs are heavier which causes more wear on the roads.
        mym1990 2y ago
        This makes sense. Gas taxes in almost all states pay for a lot of programs related to DMV activities and what not, so DMVs are having to figure out other ways to recoup the costs of EVs.
        Rebelgecko 2y ago
        California has had extra EV registration fees for years. Unfortunately it makes sense to do that if road maintenance/repairs are dependent on gas taxes
        silverquiet 2y ago
        I did the math and it seems that the TX legislature assumes an EV is going to be driven around 80,000 miles a year.
        beaeglebeachedd 2y ago
        Isn't that because the gas tax is regressive against the poor who have older cars with bad gas mileage and this compensates by having rich electric owners pay the share of gas tax they've skirted?
  - josh3736 2y ago
    It's almost certainly the real estate taxes. In California, Prop 13 makes real estate tax effectively de minimis (especially if you bought a long time ago), and the higher income tax rates make up for that. Texas rates are higher and there's no limitation on their growth. This difference is obscured if you're a renter.
    - jotux 2y ago
      Real estate and sales tax are what get people in texas: https://www.cato.org/blog/are-taxes-really-lower-california-texas https://www.cato.org/blog/are-taxes-really-lower-california-...
  - rectang 2y ago
    https://fortune.com/2023/03/23/states-with-lowest-highest-tax-burden https://fortune.com/2023/03/23/states-with-lowest-highest-ta... Essentially, California has a more progressive tax system than Texas.
  - deleted 2y ago
    [deleted]
- dgfitz 2y ago
  Doesn’t the local rate depend on… where in the state you live? These numbers don’t make sense at all.
- beaeglebeachedd 2y ago
  Can't be, texas only has tax receipts on about 8% of their gdp. https://texasgateway.org/resource/162-taxation https://texasgateway.org/resource/162-taxation
- abeppu 2y ago
  I think every "effective tax rate" calculation, which necessarily combines several things, needs more information about methods ... but I think your statement sounds pretty backwards. E.g. this seems pretty methodical and finds 13.5% for CA and 8.6% for TX. https://taxfoundation.org/data/all/state/tax-burden-by-state-2022/ https://taxfoundation.org/data/all/state/tax-burden-by-state...
  - beaeglebeachedd 2y ago
    Yes the accurate way is to add receipts plus unpaid annual taxpayer liabilities. Divide by gdp. Most the weird ways you see are bogus, for interesting controlling for average taxpayer doesn't take into account the plebs ultimately pay the taxes of the rich through higher prices that look like private income/spending but are actually offsets for higher tax.
- tnel77 2y ago
  My understanding is that California taxes are better for lower-income people, and Texas taxes are better for higher-income people. Your situation will dictate what state is better for your finances.

jltsiren 2y ago

The pay gap discussed in the article is more about low wages than high wages. The 75th percentile is the third highest in the country, but the gap between that and the 25th percentile is the largest. In other words, the gap is more about people making less than $40k than about people making over $90k.

xnyan 2y ago

The effective state and local tax rate is ~12.5% in Texas and 9.6% in California.

pton_xd 2y ago
Having lived in both California and Texas I have to say, that's a stretch. What data is backing up those numbers? Does that include sales tax, gas tax, utility tax, car registration fees, and every other form of state tax?
- mym1990 2y ago
  Not sure what "effective" tax rate means, but 9.6% seems accurate to me for income tax only, and can go up to 12%. Sales tax is like 7 something, and all the other taxes are all over the place.
  - pton_xd 2y ago
    Right but the Texas income tax rate is 0% and the sales tax is 6.25%. So I'm curious how they arrived at a 12.5% vs 9.6% effective tax rate.
    - silverquiet 2y ago
      Speaking as a Texan, Texas has plenty of ways to tax you. My favorite is the punitive registration fees they recently added to electric cars.
      - pton_xd 2y ago
        Better than California requiring 0.65% of your vehicle value every year in licensing fees. Washington state also added a yearly EV registration fee. Their argument is the gas tax pays for road maintenance, but EVs don't consume gas, so they need some other way of extracting money from those owners.
        paulryanrogers 2y ago
        EVs are heavier which causes more wear on the roads.
        mym1990 2y ago
        This makes sense. Gas taxes in almost all states pay for a lot of programs related to DMV activities and what not, so DMVs are having to figure out other ways to recoup the costs of EVs.
      - Rebelgecko 2y ago
        California has had extra EV registration fees for years. Unfortunately it makes sense to do that if road maintenance/repairs are dependent on gas taxes
        silverquiet 2y ago
        I did the math and it seems that the TX legislature assumes an EV is going to be driven around 80,000 miles a year.
      - beaeglebeachedd 2y ago
        Isn't that because the gas tax is regressive against the poor who have older cars with bad gas mileage and this compensates by having rich electric owners pay the share of gas tax they've skirted?
- josh3736 2y ago
  It's almost certainly the real estate taxes. In California, Prop 13 makes real estate tax effectively de minimis (especially if you bought a long time ago), and the higher income tax rates make up for that. Texas rates are higher and there's no limitation on their growth. This difference is obscured if you're a renter.
  - jotux 2y ago
    Real estate and sales tax are what get people in texas: https://www.cato.org/blog/are-taxes-really-lower-california-texas https://www.cato.org/blog/are-taxes-really-lower-california-...
- rectang 2y ago
  https://fortune.com/2023/03/23/states-with-lowest-highest-tax-burden https://fortune.com/2023/03/23/states-with-lowest-highest-ta... Essentially, California has a more progressive tax system than Texas.
- deleted 2y ago
  [deleted]
dgfitz 2y ago
Doesn’t the local rate depend on… where in the state you live? These numbers don’t make sense at all.
beaeglebeachedd 2y ago
Can't be, texas only has tax receipts on about 8% of their gdp. https://texasgateway.org/resource/162-taxation https://texasgateway.org/resource/162-taxation
abeppu 2y ago
I think every "effective tax rate" calculation, which necessarily combines several things, needs more information about methods ... but I think your statement sounds pretty backwards. E.g. this seems pretty methodical and finds 13.5% for CA and 8.6% for TX. https://taxfoundation.org/data/all/state/tax-burden-by-state-2022/ https://taxfoundation.org/data/all/state/tax-burden-by-state...
- beaeglebeachedd 2y ago
  Yes the accurate way is to add receipts plus unpaid annual taxpayer liabilities. Divide by gdp. Most the weird ways you see are bogus, for interesting controlling for average taxpayer doesn't take into account the plebs ultimately pay the taxes of the rich through higher prices that look like private income/spending but are actually offsets for higher tax.
tnel77 2y ago
My understanding is that California taxes are better for lower-income people, and Texas taxes are better for higher-income people. Your situation will dictate what state is better for your finances.