
“I’m moving out of state”: employees are trying to avoid California income tax - SirLJ
https://www.recode.net/2019/2/6/18211362/uber-airbnb-tax-avoidance-california-ipo-wealth
======
pliny
>On the other hand, Silicon Valley money is made in California and draws on
California services. Employees commute to work on taxpayer-funded roads and
many studied at taxpayer-funded schools. And one extreme example: When a
gunman shot four people on the campus of YouTube last spring, it was San Bruno
police that responded to the scene.

This argument is scale invariant, you could say that any level of taxation
justifies any level of services. The moral argument for not aggressively
minimizing your tax burden has to pass through the question of how effective
the state is at spending the money it collects, and so it must also depend on
the question of how other states manage to do the same work the California
Government does (having schools, roads and police) with much lower rates of
income and sales tax and a much less smaller tax base.

~~~
cpursley
> how effective the state is at spending the money

Exactly! I'm okay with higher taxes as long as the jurisdictions who collect
them are good stewards of the money. First, governments must prove to me that
they can efficiency provide promised services before convincing me to hand
over more.

How is it that other nations/jurisdictions can have lower taxes than the USA,
but still manage to provide for universal healthcare, free education, and a
well funded military (Russia with a 13% flat tax and Singapore with a 22% top
rate come to mind)?

I just don't understand where the tax money is going in the USA at both
federal and state levels. Why do we get such low value for our tax revenue?
Also, my problem with tax systems is they are often about "punishment" and
politics instead of providing government services...

~~~
anonuser123456
>I just don't understand where the tax money is going in the USA at both
federal and state levels.

You can find it online with a simple Google search. Pensions, medicare and
social security are the bulk of the spending.

~~~
pjc50
Two out of the three of those are deferred compensation and linked to earlier
wage deductions.

~~~
castlecrasher2
Unless I'm mistaken and the national debt is actually the national assets, the
money is obtained through taxes now rather than taxes before.

~~~
dragonwriter
> Unless I'm mistaken and the national debt is actually the national assets,
> the money is obtained through taxes now rather than taxes before.

Well, the part of the national debt at issue (at least as regards Social
Security and Medicare) _is_ also part of the national assets; since
“intragovernmental debt” sits on both sides of the balance sheet.

------
Reedx
As someone that lives in the Bay Area, I wouldn't mind it if our taxes were
being used effectively. But _we do so little with so much_. The state of our
infrastructure, public transit and the homeless situation is embarrassing.
Especially in SF.

The conversation about taxes always seems to be so shallow to the point of
being binary. One side saying we need to increase taxes to fix things, the
other saying we need to decrease them.

What about efficiency? We can do a lot more with what we have.

~~~
moosey
Normally a country that is the size of CA, and having the same economy, would
have a broader tax base because it wouldn't be losing money to another
government, in this case, the federal government of the United States.

Of course, there is Prop 13, which greatly harmed the state's ability to
collect taxes.

Finally, I'd argue that efficiency is impossible as long as the government
continues to use the same just-in-time models that the private sector uses.
The main problem being that there is no guarantee of work or quality when a
contractor is hired by a government. We either need those guarantees or we
need to switch back to in-house work.

~~~
RhysU
Normally a country that is the size of CA, and having the same economy, would
have to pay for its own military, etc. The Federal government does provide
irreplaceable services.

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turc1656
The article is either slightly disingenuous or just structured less than
ideally: _" It’s perfectly legal, but is it right?"_ but then shortly after...
_" A post office box or a studio apartment somewhere on the east coast?
They’ve seen it before. Claiming that your significant other and kids live in
California — but you don’t? Good luck with that."_

That's not legal tax avoidance. That's downright tax evasion and is a crime.
If you are making false claims on your tax returns that's flatly illegal. Full
stop. Do not pass go. Do not collect $200. Some of these claims made aren't
very debatable or up to much interpretation. Saying you live somewhere but you
don't is lying and when done on official documents that's illegal and a form
of fraud - in this case evasion. You can't claim to live on the East coast but
then somehow work in Silicon Valley everyday and your family lives in CA.

------
commandlinefan
Yeah, the big fear here in Texas is that they're all going to move down here
with their California liberal sensibilities and vote in a state income tax
here, too.

~~~
influx
Likewise here in Washington state. All the Californians are fleeing here and
implementing the exact same polices that drove them to leave. Odd.

~~~
blakesterz
I lived in Seattle in 1993 and people were saying the same thing then. I know
that sounds like a snarky throw away comment, but my point is just that people
thought the same thing in 1993. I don't know if it's different now, could be.

~~~
pochamago
Were they wrong? Hasn't Seattle shifted to be more like California over time,
politically?

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CompelTechnic
>If you’re hanging out in California for nine months or more in a year, you’re
considered a Californian. But even if you’re there for shorter periods, the
state can still consider it your domicile if the fact pattern shows that
you’re treating California like your real, true home. And that’s why advisers
recommend that the megarich do a ton of sometimes unpleasant things to
establish a real domicile elsewhere.

This is a key point in the article. California goes out of its way to bend the
rules in its favor, and to claim certain people are residents when a basic
residency test does not determine that they live there. I have previously read
horror stories of people hounded for years, having to fight it out, and either
paying taxes they do not owe or accumulating late fees for taxes that they
should not owe.

It is fair to set a stricter, objective, residency test. But it isn't fair to
treat people the way they are doing it now.

~~~
logfromblammo
It's fair for states to set residency requirements for some things, such as
whether you qualify for in-state tuition, or for hunting and fishing licenses.

But I don't think that change of legal domicile should be anything but an
overt act of volition. If you surrender your driver's license from your old
state, and take a replacement from your new state, you have _implicitly_
changed your domicile to the new state. But changing that driver's license may
just be a concession to the fact that the new state is where you do most of
your driving, and your old state might make it too inconvenient to renew
licenses when you are physically elsewhere. Inconvenience alone does not make
one's home change. You might physically spend 11.5 months out of every year in
State X, but you might also have 2 parents, 1 grandparent, 3 siblings, 2 aunts
and uncles, 5 first cousins, 15 old friends, and 30 cemetery burial plots for
people whom you knew, and years of memories in State Y. I think your domicile
is probably State Y, no matter what State X tries to claim.

I have been where I am now for about ten years, but I still don't consider it
"home". I'm only here because this is where the job is. I don't know when,
exactly, I can ever return "home", or where it might be when I do, but the
only places I have lived so far that really felt like "home" so far were
Indianapolis and Madison, Wisconsin. Everywhere else has felt like the place
belongs to someone else, and I was only allowed to temporarily stay there by
some special indulgence.

Any state that tries to tell me that it is my home, whether I want it to be or
not, is probably not one that I'd _want_ to be my home.

------
Bucephalus355
I fly out to California 5 days a week for consulting work currently. I live in
Texas. So does my wife and dog.

My paycheck’s now include the 13% deduction from California :(

I’m leaving this project as soon as possible.

Would happily pay 13% more for _federal income tax_ FWIW.

~~~
skh
Why does a 13% tax to California bother you if a 13 percentage point increase
in tax to some other entity doesn’t? Is it dislike of California? Dislike of
state taxes?

This reminds me of an experiment I read in - I think - _Nudge_. A random group
of people were given the scenario of being at a store and about to buy a box
of chocolate for $10. Just before they purchase it they find out they can buy
it at a store a few blocks away for $5. Most said they would go to the other
store.

Another group of random people were asked the same scenario but with a tuxedo
costing $1500. The competitor store a few blocks alway sold the tuxedo for
$1495. Most said they would not go to the other store for just a $5 decrease
in cost.

~~~
panzagl
He doesn't live in California so would see no benefit from the CA tax, while
he theoretically would from a Fed increase.

~~~
IvyMike
> would see no benefit from the CA tax

Well, no benefit except for the 70% of his time he spends there.

~~~
ryandrake
But, what benefit is he getting during his temporary stays there that is worth
anything close to the 13% they're taking?

California's budget is about 35% health care (his doctor is probably back in
Texas), 20% education (his kids if he has any go to school in Texas), and
about 20% to pensions for state workers, which he obviously derives no benefit
from. So how do you justify taxing someone who doesn't live here based on the
"benefits" they receive?

~~~
vidarh
If he feels he's not getting sufficient benefit, because of a belief he
doesn't live there, he's of course free to choose not to work there.

~~~
IvyMike
He's already stated that he's not going to take another $1M+ job in California
again. I wish him the best of luck.

------
j-c-hewitt
The sort of funny aspect of bringing up that local CA non-state police
responded to the Youtube shooting is that having your office shot up by a
radical Iranian vegan Youtuber is also only something that could happen in
California.

------
addicted
A major issue is that California pays for its own stuff, but it also has to
pay for most other states’ stuff as well.

A lot of other states get by with lower state tax simply because they are net
receivers of federal taxes which supplements stuff Californians pay for
themselves.

~~~
panzagl
It pays for stuff Californians rely on but can't stand the sight of.

~~~
logfromblammo
Like the air and missile defense installations in Alaska that happen to be
near all the great circle routes between Pyongyang, Beijing, or Kamchatka; and
Seattle, Portland, or San Francisco.

------
outside1234
Good luck with that - if you have a California license plates, drivers
license, or they can prove you show up pretty frequently to a California
located job - you are going to get caught doing this and fined extensively.

Also, WTF: You took advantage of all of the infrastructure of a state to get
rich and now you don't want to contribute back? Shame on you and may karma
come around for you.

~~~
scottlocklin
Lol, have you ever actually been to California? The infrastructure was all
built in the 1960s, and appears to have been abandoned as thoroughly as the
Roman aqueduct system after the barbarian invasions.

Easily the most corrupt state I've ever seen; most of the money goes to buying
votes.

~~~
logfromblammo
If anyone lives in a state that is _not_ corrupt, please raise your hand.

Don't be shy. We promise that we won't move in and ruin it for you all at
once.

...No one?

Corruption follows the money. Highly paid jobs follow the money. By an
argument purely by correlations and assumptions, I'd say that most of the
people on HN have highly paid jobs in states with plenty of people, and plenty
of money to spend on the tech industry, and therefore also experience some
local corruption.

It's easy for a county, parish, or state to be honest when there's really
nothing around to steal and no one rich enough to extort. It's only when
someone shows up flashing a big wad of cash that people start to think about
how to peel a few bills off of it. But then there are also plenty of places
that steal as much as they can from everybody, all the time, no matter how
poor, because they're the only ones around, and the system is already in place
to do it.

So, in short, all rich counties are a little bit corrupt, because they're
where the money is. Poor counties are either all the way corrupt, because
that's the only way to pay for their corruption, or not corrupt at all,
because there'd be no profit in it.

So by this hypothesis, California, Texas, New York, Florida, Illinois,
Pennsylvania, Ohio, New Jersey, Georgia, North Carolina, Massachusetts,
Virginia, Washington, Michigan, and Maryland are all at least a little bit
corrupt. Vermont, Wyoming, Montana, South Dakota, Alaska, North Dakota, Rhode
Island, Maine, Idaho, Delaware, West Virginia, New Hampshire, Hawaii, New
Mexico, and Puerto Rico might possibly not be corrupt, or might be sickeningly
pervasively corrupt, but you don't live there, so how would you know?

~~~
scottlocklin
New Hampshire is great; unlike California corruption, whatever hypothetical
corruption there is here, I don't have to pay for with my tax dollars. The
place is run with Prussian efficiency, so hypothetical corruption doesn't
impact my daily life. It's an astounding upgrade.

Unlike California, the roads work (the potholes start on 93 as soon as you
cross the border to Massachusetts). Let's do a full stop there. California
basically doesn't have weather, meaning the simple governmental function of
road maintenance should be trivial. Here we have snowstorms (yes, yes
California does too ... in the mountains where nobody lives), and somehow the
roads are vastly better. Building new lanes or new stretches of highway also
takes months instead of decades. Beyond that, despite the existence of
copwatch in places like Berkeley, and the lack thereof here, somehow NH police
are not insane stormtroopers. Housing outside of Portsmouth is zoned to be
easy to build in, so property is what it should cost. Small businesses aren't
regulated to death. Streets are safe despite the fact that you can walk around
with a submachine gun in your pocket. Water is clean. There is no pollution to
speak of. There aren't vast seasonal forest fires because the state doesn't
have lunatics preventing normal forestry management practices. I've been here
a year and there have been no pitched street battles between gangs of thugs
over ... people talking ... in the entire state; a regular fall occurrence in
Berkeley (and no doubt other towns in California). Oh yeah, and it took me 20
minutes to get a NH drivers license and register a car; something that would
probably take me multiple days in California.

You can talk about corruption as if it is "well this many people went to jail
for corruption" -IMO that is a lousy proxy for corruption. Nothing works in
California; it is "failed state" level corruption; anarcho-tyrrany except for
Google/Facebook oligarch tier people who probably don't pay California taxes
either. If I could bribe minor officials like I could in other failed states,
it would actually be an improvement over the way California works now.
California is an IRL dystopia. Nice weather though, and some interesting
people live there out of what I assume is inertia and provincialism.

~~~
cc439
You've basically summed up my opinion on CA in comparison with my current
state of residence. The only major diffetence is our roads also suck like CA's
despite having a similar weather advantage but at least I can blame them on
the insane amount of truck traffic (~50% of interstate traffic outside of rush
hour) fhat stems from our status as a major manufacturing hub. We don't pay
much in taxes and all that sweet, sweet value added manufscturing employment
and wage growth is worth the potholes in my opinion.

I recently visited SF, the capitol city of HN's core demographic and my wife
and I stood aghast at the sheer filthiness and unseemly nature of the place.
Present day San Francisco is a place ripped straight from the pages of a
dystopian cyberpunk-ish novel from 20-40 years ago. Excessive wealth
cloistered in enclaves surrounded by slums (homeless camps) and a complete
degenration of the public square (in a broad sense, I'm referring to all the
public spaces in the city center) into a gallery of feces, drug abuse, and
general decay all bathed in the glow of private spaces reserved for the
wealthy tech elite. The "high tech, low life" aesthetic popularized by that
genre has been given life in that city and it is terrifying to see such a
nightmare become reality.

------
koolba
Anybody here have success with having their founder stock be “bought” by their
IRA? Wouldn’t want the whole thing in there but a sizable chunk combined with
a liquidation event would give a massive tax deferred retirement account. Plus
if you do it early on you could value the initial stock at peanuts.

------
AlexandrB
> The state of California treats capital gains just like any other income,
> levying a 13.3 percent state tax on sales of stock. For someone sitting on
> tens of millions of dollars in private stock — life-changing money for some
> — it’s not a small concern.

Yes, it literally is! It's 13% - that's about the same as sales tax in many
places and nowhere near AOC's 70% tax. This is greed, plain and simple. 99% of
the world would do almost anything to have this "problem".

~~~
tenpies
And 99% of the world would act in the same way if they had the luxury of that
problem. I understand why Leftist populists love attributing some sort of
exceptional immorality to the wealthy, but people act on incentives. Give them
an incentive to leave and they will leave.

~~~
kristianc
Quite - Leftists reframe the question "Why do you need that money?" when the
one we should be asking is "Why is the state entitled to it?"

~~~
skh
Your question is just as bad. Here’s the framing I prefer.

1\. Government is necessary since some things are best run by public services
and without a for-profit motive.

2\. What are these things?

3\. How much money should be raised to properly run these things?

4\. What is the optimum tax rate/policy to achieve this goal?

~~~
kristianc
You'll never get to that framing while taxation is presented in and of itself
as an unalloyed good, and the Left is asking "What's the maximum we can tax
people before they stop working?" or the new favorite from Saez et al "Okay,
the rich might stop working a little, but how much are we prepared for them to
stop working before we have to lower taxes?"

My framing allows people to say 1. in response, if it is able to specify 2.,
and if it can then determine 3 and 4.

What it doesn't allow people to do is say "the state is entitled to as much in
taxation as it can get away with, because the state also builds roads and
hospitals" ('You didn't build that'), or "the state is entitled to use
taxation as a proxy for creating equality of outcome" ('This is Class
Warfare').

~~~
skh
Your question used the word “entitled”. It is reminiscent of those who say
that taxation is theft. Your framing does none of 1, 2, 3, and 4.

I don’t understand the point of your first paragraph. It’s a caricature of
people you call the Left. I have never seen anyone anywhere paint taxation as
an unalloyed good in and of itself. Can I suggest that instead of talking in
terms of Left/Right that some other dialog be used? This is why I framed
things the way I did. There’s not mention of Left or Right. It’s just
questions that get at the heart of what being a society means.

~~~
AnimalMuppet
I have seen the (far?) Left say, quite recently and very publicly, that wealth
inequality is an unalloyed _bad_ , and that taxation is the answer. That's not
quite "taxation is an unalloyed good", but it's definitely "you don't need
(and shouldn't have) that money, so we'll take it".

~~~
skh
OK. I guess don't change the framing of taxation from Right vs. Left to
framing the issue to one of determining the optimal way to fund what society
needs/wants.

I doubt you can large numbers of the Left saying what you claim. Specifically
that the reason for wanting to increase taxes is to get rid of wealth
inequality. I have heard people say things to the effect that beyond a certain
point the wealthy can afford to pay more taxes in order to fund some programs.
These things are nuanced and it's not helpful to reduce everything to a
slogan.

