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Living in California is really wonderful for the most part - but the state income tax is a killer. I'd love to move back to Cali, but it would involve a higher
by mattjaynes 18y ago
Living in California is really wonderful for the most part - but the state income tax is a killer. I'd love to move back to Cali, but it would involve a higher cost of living (not a big deal) and about a 10% pay cut (due to state income tax, and a big deal). I work remotely, so when deciding where to live next I have to think through:
"Ok, I'd looove to live in the Bay Area, but if I lived in Seattle where there's no income tax, I could have an extra X bucks per month."
Where X is 9.3% of your salary:
60K => $465/mo
80K => $620/mo
100K => $775/mo
120K => $930/mo
So the question becomes, is it worth the X bucks a month to live in Cali? Sometimes it is, sometimes it's not. I use Seattle as an arbitrary example of course - but it could be any of the no income tax states. Of course, many folks don't have the option at all - but more and more people will be able to choose in the future.
I don't know much about how state governments work - but it's interesting to see how some states can have no income tax and still be better off financially than high income tax states like Cali. Sometimes I hear the argument that it's because the no income tax states have much higher sales taxes. However, the sales tax in Cali vs Washington or Texas seems about the same (around 8%). Perhaps there's a big difference in property taxes - I'm not a homeowner so I don't know or really care about that. A lot of it does seem to come down to how well the state is run when you look at it as a business instead of a 'state'.
As an aside, if you live in a no income tax state and want to avoid sales taxes where possible - Amazon Prime is your friend ;)
- jpancake 18y agoI live and work in San Francisco, and according to you I should be paying $620 a month in state income tax. According to my payslip I pay ~$420 (awesome) a month, $60 of which is for state disability insurance.
- kicker 18y agoHow much do you contribute to 401K?
- jpancake 18y ago$0
- blackguardx 18y agoWhy so low?
- helveticaman 18y agoYes! I knew I wasn't the only one who thought that was worthless. Sure, it's a sweet deal from a tax perspective, but only if you trust the government.
- ryanwaggoner 18y agoHe's ignoring the fact that tax rates are marginal. 9.3% only kicks in for amounts earned about 40 or 50k...I haven't look up the exact numbers. He's also ignoring various deductions and credits you can take.
- anamax 18y ago> I don't know much about how state governments work - but it's interesting to see how some states can have no income tax and still be better off financially than high income tax states like Cali. One interesting question is why should state and local taxes be deductible at the federal level? Yes, I know that folks are paying them, but presumably they're doing so for the benefits. Why should folks in low tax states pay more federal taxes to cover state tax benefits that they don't get?
- rsheridan6 18y agoYou would also have to consider the likelihood that taxes will increase, given that the state is practically bankrupt as it is. California is a beautiful place (at least some of it is), but I wouldn't want to live there because of the state government.