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California Fleeing - A Question

skeptic llc

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My family and I recently (as in, this week) left California for a state that doesn't require 10+% of our income to provide, as best I can tell, the same services - roads, schools, etc. My question: what on earth does California spend all the state income taxes on that other states don't need?

While I am indifferent to political correctness, the new state is blue too, so I'm not really soliciting mindless partisanship here. I would actually like to hear others' thoughts or information.

Thanks!
 
My family and I recently (as in, this week) left California for a state that doesn't require 10+% of our income to provide, as best I can tell, the same services - roads, schools, etc. My question: what on earth does California spend all the state income taxes on that other states don't need?

While I am indifferent to political correctness, the new state is blue too, so I'm not really soliciting mindless partisanship here. I would actually like to hear others' thoughts or information.

Thanks!

Could be the $50B spending on Pensions has something to do with it.
 
My family and I recently (as in, this week) left California for a state that doesn't require 10+% of our income to provide, as best I can tell, the same services - roads, schools, etc. My question: what on earth does California spend all the state income taxes on that other states don't need?

While I am indifferent to political correctness, the new state is blue too, so I'm not really soliciting mindless partisanship here. I would actually like to hear others' thoughts or information.

Thanks!

This might have something to do with it:

Despite California’s $54 billion budget deficit and $1 trillion unfunded pension liability, there are 340,390 government employees bringing home six-figure salary and pension checks.

...

Our auditors at OpentheBooks.com found truck drivers in San Francisco making $159,000 per year; lifeguards in LA County costing taxpayers $365,000; nurses at UCSF making up to $501,000; the UCLA athletic director earning $1.8 million; and 1,420 city employees out-earning all 50 state governors ($202,000).

 
My family and I recently (as in, this week) left California for a state that doesn't require 10+% of our income to provide, as best I can tell, the same services - roads, schools, etc. My question: what on earth does California spend all the state income taxes on that other states don't need?

While I am indifferent to political correctness, the new state is blue too, so I'm not really soliciting mindless partisanship here. I would actually like to hear others' thoughts or information.

Thanks!

Care to tell us which state?
Don't worry, nobody from Cali is going to scour your new home state looking for you.
 
For one thing, WA isn't even seven and a half million people and it's a fraction of the size of Cali, too.
Smaller state, smaller budgets.
Plus, bear in mind that you WILL be paying other "taxes"...it's just that they don't call them taxes, they call them fees.
Washington also has one of the highest sales taxes in the country -- next to Louisiana, Alabama, Arkansas and Tennessee.
And Washington is #25 in property taxes.
Seattle tax attorney, Scott Edwards says, "the other aspect of affordable is not just the tax, but the cost of doing business, which in addition to taxes, regulations, permits makes it harder to build more housing, more office space, retail and that drives up rents as well."

If you earn $24,000 per year, it's estimated you spend 18 percent of your income on local taxes like sales, gasoline and property taxes. If you earn between $70,000 and 100,000 per year, it's estimated that nine percent of your income goes to local taxes.
 
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California went from a billion dollar budget surplus to looking at 50 billion now. That number will only go up more next year with all of the shrinking tax revenues from loss of business. Someone already mentioned unfunded public employee pension liabilities---- which BTW are paid off first by cities due to a more recent Democrat inspired change to the state constitution which means these public employee pensions are guaranteed by the taxpayers. Something non public unions don't get.

Then last week the California assembly and the Governor created a commission to look into paying African-Americans reparations for slavery. Hello--- California was never a confederate state and slavery was never legal here.

As more older retired people leave that state with their investment incomes, who is replacing them other than $15 minimum wage employees who don't pay any taxes anyway.
 
For one thing, WA isn't even seven and a half million people and it's a fraction of the size of Cali, too.
Smaller state, smaller budgets.
Plus, bear in mind that you WILL be paying other "taxes"...it's just that they don't call them taxes, they call them fees.
Washington also has one of the highest sales taxes in the country -- next to Louisiana, Alabama, Arkansas and Tennessee.
And Washington is #25 in property taxes.
Seattle tax attorney, Scott Edwards says, "the other aspect of affordable is not just the tax, but the cost of doing business, which in addition to taxes, regulations, permits makes it harder to build more housing, more office space, retail and that drives up rents as well."

If you earn $24,000 per year, it's estimated you spend 18 percent of your income on local taxes like sales, gasoline and property taxes. If you earn between $70,000 and 100,000 per year, it's estimated that nine percent of your income goes to local taxes.
What bewilders me is that California's rate of income taxation of high income taxpayers is extremely high and raises a ton of revenues. I don't see that offset through reductions in other CA taxes (e.g., Prop 13 is a disaster, but because property values in CA are so high, property taxes are not actually cheap for the vast majority of homeowners). Washington sales taxes just aren't going to make up the difference (CA's are pretty high too anyway). I feel like the spending side in California has to be to blame, and there has to be (per capita) spending on some things that dwarf what other states spend, hence my inquiry.
 
What bewilders me is that California's rate of income taxation of high income taxpayers is extremely high and raises a ton of revenues. I don't see that offset through reductions in other CA taxes (e.g., Prop 13 is a disaster, but because property values in CA are so high, property taxes are not actually cheap for the vast majority of homeowners). Washington sales taxes just aren't going to make up the difference (CA's are pretty high too anyway). I feel like the spending side in California has to be to blame, and there has to be (per capita) spending on some things that dwarf what other states spend, hence my inquiry.

I disagree with you on California's prop 13. Even if someone isn't grandfathered into the original deal, having a maximum cap of only 2% increase is a huge benefit to all homeowners who's properties are increasing. And even if they sell, the new buyer pays just 1% of the sale price (value) and then goes on to have the 2% max limit each year.

If California get rid of prop 13 protections, landlords will have to exponentially increase rents in a state already with high rental prices.
 
I disagree with you on California's prop 13. Even if someone isn't grandfathered into the original deal, having a maximum cap of only 2% increase is a huge benefit to all homeowners who's properties are increasing. And even if they sell, the new buyer pays just 1% of the sale price (value) and then goes on to have the 2% max limit each year.

If California get rid of Prop 13 protections, landlords will have to exponentially increase rents in a state already with high rental prices.
Depends how you look at it. If there is a share of the tax burden that is going to be covered by property taxes, Prop 13 divvies up that share in a way that is painfully unfair. Struggling to buy your first home? You pay 1% of the purchase price (which is a lot). Inheriting a home from daddy who bought it when he was young? You pay next to nothing. Prop 13 favors those who bought long ago (which was intended when it was passed) and those who inherit from them (which was not), at the expense of those who are buying now.

The other aspect of Prop 13 that pains me is to shift funding from property taxation, which is relatively stable, to income taxation, which is not. A lot of the state's budget chaos (big surpluses, then radical spending cuts) come because property tax revenues are choked off due to Prop 13.

In terms of landlords, I don't know that that's true. Reworking property taxation from a current system that prefers homes held for generations to one that simply taxes based on current values (i.e., without artificially advantaging some owners over others based on length of ownership) does not inherently cut one way or another. If you quit forcing newer owners to subsidize older ones (by picking up their share of the property taxes), you'd probably change which people would hang onto properties, but not how much they would charge in rent. For example, in moving out of CA, I ran numbers on keeping our home and using it as a rental. The problem was that, because we bought our home in the not too distant past, property taxes would have been a huge hit against what rental income could have brought. Had we inherited our home from a parent, the numbers would have looked different. And had California taken the same property tax revenues it is going to collect and just divvied up the burden fairly among all homeowners, it would have come out somewhere in between.

All just IMO. Your thoughts?
 
Depends how you look at it. If there is a share of the tax burden that is going to be covered by property taxes, Prop 13 divvies up that share in a way that is painfully unfair. Struggling to buy your first home? You pay 1% of the purchase price (which is a lot). Inheriting a home from daddy who bought it when he was young? You pay next to nothing. Prop 13 favors those who bought long ago (which was intended when it was passed) and those who inherit from them (which was not), at the expense of those who are buying now.

The other aspect of Prop 13 that pains me is to shift funding from property taxation, which is relatively stable, to income taxation, which is not. A lot of the state's budget chaos (big surpluses, then radical spending cuts) come because property tax revenues are choked off due to Prop 13.

In terms of landlords, I don't know that that's true. Reworking property taxation from a current system that prefers homes held for generations to one that simply taxes based on current values (i.e., without artificially advantaging some owners over others based on length of ownership) does not inherently cut one way or another. If you quit forcing newer owners to subsidize older ones (by picking up their share of the property taxes), you'd probably change which people would hang onto properties, but not how much they would charge in rent. For example, in moving out of CA, I ran numbers on keeping our home and using it as a rental. The problem was that, because we bought our home in the not totao distant past, property taxes would have been a huge hit against what rental income could have brought. Had we inherited our home from a parent, the numbers would have looked different. And had California taken the same property tax revenues it is going to collect and just divvied up the burden fairly among all homeowners, it would have come out somewhere in between.

All just IMO. Your thoughts?


A couple of points:

First off the number of homes still taxed at the pre 1978 pre prop 13 rates that are grandfathered in are a much smaller percentage today they admit. So when they make it sound like it is a lot in that categegory, that just isn't true. After that EVERYONE benefits from the 2% annual cap no matter when they bought or for how much they paid. If that is removed then just as before prop 13 --- a lot of retired people on fixed incomes end up having to sell and where do they go? Retirement homes at 7-12k per month?

The current system actually is fair, but that state and the liberal legislature have always hated it because it limits their tax and spend ability. Buying a first home has always been difficult, but if you think it wasn't hard years ago, maybe you aren't as old as me. After my wife and were married in our 20s the interest rate on our fist home was 9.75% and you had to come up with 20% down, and in addition you could not get a home loan unless you could prove that no more than 25% of your gross income would go to paying the loan payments. That was a heavy lift for young people starting out. But I got to tell you, there were far less foreclosures then too. Young people started saving for their first home at age 18 if they were smart. I guess I would say you are really lucky to have inherited a home.

The thing about buying real estate is still the same. Location, Location, Location---- and TIMING. When someone says to make things "more fair for everyone", I generally suspect that is more about getting some folks off the hook from what people before them struggled to achieve. Prior to prop 13 many retired people were unable to keep up with exponential hikes in taxes due to skyrocketing real estate demand in that state--- so how was that fair to them? Some working class WW2 vet worked their whole lives for some stability and the state punishes them because everyone else is willing to pay way more than some property may be worth---many of them speculators with big banks behind them, and now grandma and grandpa have to sell and move to a trailer park in bum fook Nevada?

California just needs to be more fiscally responsible with the taxes they already get rather than driving everyone else out of the state or into bankruptcy and foreclosure. I'd say keep prop 13 and LOWER the ad vorlem rate for everyone and then tell Sacramento to be more responsible like other states have to do.
 
A couple of points:

First off the number of homes still taxed at the pre 1978 pre prop 13 rates that are grandfathered in are a much smaller percentage today they admit. So when they make it sound like it is a lot in that categegory, that just isn't true. After that EVERYONE benefits from the 2% annual cap no matter when they bought or for how much they paid. If that is removed then just as before prop 13 --- a lot of retired people on fixed incomes end up having to sell and where do they go? Retirement homes at 7-12k per month?

The current system actually is fair, but that state and the liberal legislature have always hated it because it limits their tax and spend ability. Buying a first home has always been difficult, but if you think it wasn't hard years ago, maybe you aren't as old as me. After my wife and were married in our 20s the interest rate on our fist home was 9.75% and you had to come up with 20% down, and in addition you could not get a home loan unless you could prove that no more than 25% of your gross income would go to paying the loan payments. That was a heavy lift for young people starting out. But I got to tell you, there were far less foreclosures then too. Young people started saving for their first home at age 18 if they were smart. I guess I would say you are really lucky to have inherited a home.

The thing about buying real estate is still the same. Location, Location, Location---- and TIMING. When someone says to make things "more fair for everyone", I generally suspect that is more about getting some folks off the hook from what people before them struggled to achieve. Prior to prop 13 many retired people were unable to keep up with exponential hikes in taxes due to skyrocketing real estate demand in that state--- so how was that fair to them? Some working class WW2 vet worked their whole lives for some stability and the state punishes them because everyone else is willing to pay way more than some property may be worth---many of them speculators with big banks behind them, and now grandma and grandpa have to sell and move to a trailer park in bum fook Nevada?

California just needs to be more fiscally responsible with the taxes they already get rather than driving everyone else out of the state or into bankruptcy and foreclosure. I'd say keep prop 13 and LOWER the ad vorlem rate for everyone and then tell Sacramento to be more responsible like other states have to do.

Just so I don't forget to mention it, I do not disagree with all of your points. But agreeing is uninteresting, so let's get to the good stuff. (1) At one point, my wife and I lived in a (nice) mobile home at the same time that, through work, I had a lot of information about a billionaire's property taxes. We were paying more property taxes for our (first home) double wide than the billionaire paid for his forever-in-the-family mansion. I don't think we need to talk about that much; you can say I'm lying (I'm not), but it would be hard to claim that system of property taxation makes any kind of sense. (2) If you are unaware of just how much CA wealth with low property tax basis gets handed down through inheritances, you don't need my input, just do a bit of research. It is astonishing. (3) The current system really is not fair. If you buy a $1M house, you pay full taxes. If you have owned it for a while while the property value has grown, you pay partial taxes. If you have had it handed down through the generations, you pay effectively nothing. That is not fair. It is a direct subsidy of inherited wealth, and of longtime homeowners, with the burden shouldered by anyone new who comes along to buy a house. (And from an economic theory perspective, it obviously screws with efficiency, creating these bizarre incentives to never sell.)

If you really want to preserve WWII grandpa's ability to stay in his home, you keep the caps on annual increases but do not apply them to any commercial property or any residential property that is not a primary or any residential property whose primary resident has died. If CA limited the (basically) frozen property tax rules to primary residence, owner-purchased properties, I would have a lot less criticism. But it doesn't, because as soon as there is a tax loophole, the lobbies for the wealthy and for business just have to jump in and grab at it.
 
My family and I recently (as in, this week) left California for a state that doesn't require 10+% of our income to provide, as best I can tell, the same services - roads, schools, etc. My question: what on earth does California spend all the state income taxes on that other states don't need?

While I am indifferent to political correctness, the new state is blue too, so I'm not really soliciting mindless partisanship here. I would actually like to hear others' thoughts or information.

Thanks!

Which state did you move to?
 
California has the same population as Canada, but California has twice the GDP Canada does.

California can afford to buy things.

We can argue over whether or not they are spending all that money on the right things, though.
 
California is the illegal immigrant magnet of the USA - and all the associated costs.

Remember: "All the Gold in California is in a bank in the middle of Beverly Hills in somebody else's name." To be somebody in California you must either be rich or impoverished. There is no middle ground allowed.
 
Oh....yeah...plenty of Cali folks headed up there, and Washingtonians may or may not be thrilled, but you'll do fine up there.
It's not like a Californian moving to Texas or anything.

It is called Californication.

California migration that jacks up the home prices of their new neighborhoods.
 
THERE WILL ALWAYS BE
CALIFORNIA.


That understood, . . .

California's Progressive nature is being hijacked.
Universities. Medical Schools. Dental Schools
half a century or more from, Australia.


Now people may "camp" on a beach
forbidden to camping. aka tent cities.


There Will Always Be A California.
California would find a way if the Federals would stop . . .
 
My family and I recently (as in, this week) left California for a state that doesn't require 10+% of our income to provide, as best I can tell, the same services - roads, schools, etc. My question: what on earth does California spend all the state income taxes on that other states don't need?

While I am indifferent to political correctness, the new state is blue too, so I'm not really soliciting mindless partisanship here. I would actually like to hear others' thoughts or information.

Thanks!

Good question. If you want the short and sweet answer, the reason California keeps raising its taxes year on year is because California is desperate to fund its flagging pension system, which is presently just about two-thirds funded. Every time you hear a California Democratic politician at the municipal, county or state level saying we need to raise taxes for roads, for schools, for streetlamps, for hospitals, etc., it is almost always really about shoring up our government pensions. At the most generous, it is to make sure that the services in the other sectors are not cut so that pensions may continue to be funded. That's it.

That is why California roads are still pot-holed messes and our state civil services are nothing to write home about despite having a river of money flowing through our state's coffers that put many first-world nations to shame. If the money was actually paying for what it was originally allocated for, fair enough. But it is not. It is going towards mandatory payments for hundreds of thousands of retirees, and the State is looking to tax anything it can. In the near future, I could foresee the California Legislature trying to find some way to end the 1978 property tax law (Prop 13) so that property taxes can be assessed upon people's homes at Fair Market Value, sentencing elderly and disabled people living on fixed incomes to losing their homes, but garnering massive revenues for counties across the states.
 
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Good question. If you want the short and sweet answer, the reason California keeps raising its taxes year on year is because California is desperate to fund its flagging pension system, which is presently just about two-thirds funded. Every time you hear a California Democratic politician at the municipal, county or state level saying we need to raise taxes for roads, for schools, for streetlamps, for hospitals, etc., it is almost always really about shoring up our government pensions. At the most generous, it is to make sure that the services in the other sectors are not cut so that pensions may continue to be funded. That's it.

That is why California roads are still pot-holed messes and our state civil services are nothing to write home about despite having a river of money flowing through our state's coffers that put many first-world nations to shame. If the money was actually paying for what it was originally allocated for, fair enough. But it is not. It is going towards mandatory payments for hundreds of thousands of retirees, and the State is looking to tax anything it can. In the near future, I could foresee the California Legislature trying to find some way to end the 1978 property tax law (Prop 13) so that property taxes can be assessed upon people's homes at Fair Market Value, sentencing elderly and disabled people living on fixed incomes to losing their homes, but garnering massive revenues for counties across the states.
This.

I was fortunate to move away when I became an expat a year after finishing college. CA became a mess because of progressivism. Sure, its got a powerful economy, but a lot of the money being earned is spent on state government waste. Pity, it was such a great place to live until the early 1990s.
 
Every time you hear a California Democratic politician at the municipal, county or state level saying we need to raise taxes for roads, for schools, for streetlamps, for hospitals, etc., it is almost always really about shoring up our government pensions.
Superficially, that makes sense and is consistent with what I have personally observed. Do you have data/citations to validate?
 
Washington (0%)
Washington, is a lot like NORDIC countries. The oil industry bouys them. In Washington, it is Microsoft, and airplane manu. Police , fire, etc are not free. ANY scheme to get the money NOT from HONEST taxation, read, income etc, comes out of the common mans pocket.
 
The good news is that the old saying "as California goes, so goes the nation" is dead. California shows what progressivism does to a state, and you'd have to be insane to want that for the rest of the country.
 
The good news is that the old saying "as California goes, so goes the nation" is dead. California shows what progressivism does to a state, and you'd have to be insane to want that for the rest of the country.
I agree in part. I think all political movements, left unchecked, result in undesirable extremes. California is starting to show how that plays out with progressivism. The right is pouncing too quickly, as it always does in declaring California dead for the billionth time, but the problems are clearly coming to a head. As they emerge and grow, California currently has no politically viable response except more of the same, which is a cause and not a solution.
 
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