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“I’m moving out of state”: employees are trying to avoid California income tax (recode.net)
51 points by SirLJ 33 days ago | hide | past | web | favorite | 137 comments



>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.


> 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...


> Russia with a 13% flat tax

That's a common misconception. Yes, personal tax rate is 13%, but your employer will have to pay for health insurance (5.1), social services (2.9), and pension fund (22). Overall, you get closer to 43% flat tax rate.

The big difference is - you never see these moneys in the first place. Your paycheck is a net pay, all deducts are applied by the accounting department and only 13% rate is widely advertised as one the lowest in the world.


Interesting, thanks for pointing this out.

I have been considering becoming a Russian resident (and eventually citizen ~ yes, crazy). Do you know if self-employed people are liable for the other taxes you mentioned?


There are several tax schemes available and depending on your situation (who pays your bills, employees, etc) you might be eligible for "УСН - упрощенная система налогообложения" (simplified tax system). You'll pay 6% from your income + 15% from your profit. Here's an article you might find interesting (in Russian of course): https://www.moedelo.org/club/article-knowledge/individualnyj...


Спасибо!


> How is it that other nations/jurisdictions can have lower taxes than the USA

The US has substantially lower tax burden (share of GDP in taxes) than the OECD average, about 1/4 of GDP collared to about 1/3 as the OECD average.

> Russia with a 13% flat tax

Russia has a 13% flat income tax, but also has a national VAT (with different rates, not sure what the overall average is), and a social insurance tax that is regressive and has a rate of 26% up to about 3/4 of the median income.


Singapore is in many ways the anti-America: it's a tiny low-freedom centrally planned one-party state. It earns a good deal of its money from transhipment and being a commercial hub. https://www.bbc.co.uk/news/business-32028693

Russia is a petro-state run by the Mafia.


Sure, those systems aren't perfect. I'm sure there's better examples (Switzerland, Uruguay).

But they still manage to provide a situation where you're not stuck paying student loans for decades or go bankrupt because you happen to get sick. Why can't the USA, a nation with higher levels of freedom and transparency, provide the same despite collecting more tax revenue? I'm not convinced higher taxes is the answer; there's an efficiency problem. Solve that, then we can talk about raising taxes.


>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.


> Pensions, medicare and social security are the bulk of the spending.

In aggregate, less than half, even if you add Medicaid and other public health spending on top of Medicare, so not the bulk.


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


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


> 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.


All three are linked to earlier wage deductions, though one of them is in an extremely course grained way.


> much lower rates of income and sales tax and a much less smaller tax base.

What about property tax?

Some of California's higher budget may be explained by higher property prices - employees need to be paid more for the same standard of living, government property purchases cost more, etc.


> 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.

(1) They don't do the work the CA government does, which is why CA has a larger tax base.

(2) They have higher property taxes; California has the third highest median home price of the 50 states plus DC, yet the 10th lowest tax bill on median priced home of the same 51 jurisdictions.


  the 10th lowest tax bill on median priced home of the same 51 jurisdictions
You don't give a source, so it's unclear whether that figure accounts for Prop 13 effects or local added parcel taxes.

The average of existing tax bills (with embedded Prop 13 reductions) is meaningless for comparing to new-property taxes in another state.


> You don't give a source, so it's unclear whether that figure accounts for Prop 13 effects

Since Prop 13 both sets the maximum rate of property tax and sets the procedural requirements for increasing any tax in California, everything about property tax in California is “Prop 13 effects.”

I suspect what you mean is “effects of the Prop 13 limits on annual assessment increases”.

> The average of existing tax bills (with embedded Prop 13 reductions) is meaningless for comparing to new-property taxes in another state.

The point wasn't comparing new-property taxes, it was addressing “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 [sic] tax base.”

One of the ways they do it is by having higher property taxes. Often at effective tax rates higher than the prop 13 limit on nominal rates, even before the effect of assessment limits. (And, in the broader context of the thread, consideration of moving out of California, if the alternative is staying in place in California, property taxes with the Prop 13 assessment limit are absolutely the right comparison with new-home taxes in other states.)


Four paragraphs later, there is still no source given for the figures.

Anyway...

"... if the alternative is staying in place in CA, property taxes with the Prop 13 assessment limit are absolutely the right comparison..."

No, because even if staying within California, moving generally means your new residence starts at "full retail" tax basis... so that is the proper comparison. (Had Prop 5 passed, it would be very different.)


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.


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.


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.


The problem is Prop13. Corporations (and the wealthy who shelter their wealth in them) use the ol' board of directors shuffle to bypass tax reevaluations.

Getting Corps out of Prop13 would massive increase state revenues by taxing the rich.

Trickle-down theory is a sham that tries to justify not taxing the rich. It has been proven time and time again to be unsupported by the data.


What do you mean we do so little?! Look at all the GREAT THINGS we do.

Have you ever considered the privilege of drinking water? We should tax that.

What about your car? We should come up with an emissions standard that ONLY APPLIES TO US. 49 state legal? Who's the odd man out? That joker.

What about your rifle and pistol magazines? Let's make manufacturers come up with a standard that literally only applies to our state, in the entire world. That will go over well!

Droughts? HA! That would require improving and building additional infrastructure for our water reclamation system. Surely we can just let it flow into the ocean - water is water, right? PS: we're going to tax it!

Fires? Controlled burns to clear underbrush? You must really hate the environment! Why would you want to burn our precious underbrush?!?!? :(((


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.


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.


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


As a WA resident, I defy you to back that up. It’s the same shit I’ve heard for twenty years I’ve lived here: “it’s the Californians’ fault.” From bad driving to bad politics: it is your own damned fault, WA.


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.


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


> and implementing the exact same polices that drove them to leave

Except they aren't.


There's some amount of evidence to the contrary; the group moving is self-selecting and trends conservative.

One example: https://www.newsweek.com/more-native-born-texans-voted-beto-...


Do Conservative Texans fear the free market and people responding to market forces? Maybe Texas ought to raise state taxes as a means of persuading liberals from California to not move there.


If all you have is a hammer, everything looks like a nail.


Metaphorically speaking I have much more than a hammer and most things don't look like nails. But those who embrace free market forces should appreciate the proposed solution. Don't want certain types of people moving into your area? Then make it more expensive. It works remarkably well.


It’s becoming more purple instead of a red or a blue state, so it wouldn’t take much.


The only constant in the world is change.


[flagged]


False, thanks for not perpetuating misinformation.

https://www.washingtonpost.com/news/morning-mix/wp/2018/04/1...


Maybe you could walk me through the thought process of how a person fleeing an area for $REASON would then turn around and try to institute said $REASON in their new home. Because not a single Eastern European immigrant I knew in the 80s thought Communism was a good idea.

So you’re either being facetious and I fell for it, or Texas could use a state income tax to bump up their public education game.


Imagine a continuum, with California at 0 and Texas at 100. You live in California, but you personally, are philosophically at 75. You leave California and move to Texas, because it's more your style. But when you get there, it's closer to what you want, but to you, it's too far the other direction. So you try (perhaps unconsciously) to move it partway toward California.

The locals don't agree, and don't like you trying to do so.

Note well: This does not mean that a state income tax idea would be a good idea or a bad one for Texas. It only means that it would be a foreign idea.


>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.


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.


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.


So you don't mind the amount of money you're paying, you mind that it's going to a state instead of the federal government? I can't imagine that's a common gripe.


It’s going to a state he doesn’t live in, I think that’s the problem.


I can sort of relate, although that's still BS. I pay income taxes to the locality where my office is located, which is irritating when it comes time to vote and I don't have any say in how that money is spent, since I can't vote in that city. (as if we as individuals ever really have much say about how our tax money is spent)

On the other hand, if the city wasn't there the job wouldn't exist, and nobody is forcing me to work there.


How many days in California caused this to be triggered?

Looking at the CA non-resident form, I don't see how you have to pay taxes in CA:

https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents-Part...


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.


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


> would see no benefit from the CA tax

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


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?


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

Things that keep people healthier and smarter, and provide infrastructure and livable wages, do in fact benefit people in the state, resident or not.

I mean, if he's in the 13% marginal tax bracket, that means he's making $1M+ a year. ( https://www.tax-brackets.org/californiataxtable ) The fact that California has such jobs while other states don't have as many is at least partially because the state provides an environment in which such jobs can exist.


He doesn’t benefit from state workers in California? Without those workers the streets would be worse than what they are now. There would be fewer police and a non-functioning judicial system. Certainly his work benefits from a governmental entity that handles contract law disputes. The workers of the company that he works at benefit from state employees. Would the job exist if those workers didn’t exist?


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.


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


True, if he doesn't really care about his family in TX then he should have no reason to care about his taxes not going to benefit them.


He may not live in California but he WORKS in California.


He is in California five days a week, including at least 4 nights of sleep. He benefits from the airports, roads, police and fire protection, water, and all other services. He also receives such a high income due to the fact that his employer is based in California.

Why shouldn’t he contribute to the state that is providing him with income and the services to support that income?


I see now. I was focusing on not being too upset at 13% being taken in one scenario but not being upset if taken in another scenario.


Other than flying into a California airport, traveling on public streets, having suppport of local police, fire and other services while in California. That said, there are some services taxes go to that he would not receive benefit from. So paying the same tax rates as a resident does not make as much sense.


Not the grandparent poster, but a 13% increase in Federal income tax would apply to everyone in the country, regardless of where they live, and therefore would be fair. Punishing people who don't live in your state (only commute there for work and have an actual, bona fide residence elsewhere) is not fair.


Income gets taxed on where you earn it. It’s been that way for a very long time. This applies to everyone. Don’t see how it’s unfair. I’m certain OP knew this when taking the contract to work in California.


It famously applies to sportsball players as well: if you are an NBA player you pay Canadian taxes on the game check for all games in Toronto, and California taxes on your games in LA/SAC/OAK (and there are extra jock taxes and the like, but we don't need to go into that). A typical NBA player will file over 20 different tax returns for a single season.


That's not true. I was a resident of TX for two years while still working for my SD company was not subject to CA state tax. If you're not present you don't pay.


Right. That's what I said. You get taxed where you earn the money. If you aren't in California when you earn the money then you don't pay California tax. If you are in California when you earn the money then you pay California tax. (I know there are reciprocity laws among some of the states but there aren't between California and Texas.)


ok I misunderstood what you meant by "where [you earn it]". Still though, things get more complicated when you have residence in state A and spend a significant portion of your time working in state B. You're paying taxes which go to other people, regardless of whether or not you benefit partially. My kids don't get better schools, my family doesn't get better healthcare, etc.


Here's a quick solution: find a client that has an office outside of CA.


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.


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.


This I think will end up becoming more of a complaint in the coming years. There will be a shift in the set of people who use “states rights” as a reason for policies. Increasingly states that subsidize places like Mississippi and Alabama are going to wonder about the role of the federal government. Ironically, I think those who are liberal ought to embrace the Republican talking point about limiting federal power and the federal government.


>but it also has to pay for most other states’ stuff as well

Strange this point is so frequently tossed around, despite it being false:

https://www.latimes.com/politics/la-pol-sac-california-feder...

"Lawmakers have long lamented that Californians pay more in taxes than they receive back in services, hanging their hats on a 2007 report by the conservative Tax Foundation that California is a "donor state" that receives only 78 cents in services for each dollar in taxes paid. But state analysts point out that report added extra tax dollars from Californians — beyond those actually paid — to cover the state's share of the federal deficit.

Perhaps more accurate is a 2015 state-by-state review compiled by New York officials, one that puts California much closer to breaking even — about 99 cents in federal services for every real dollar in taxes."


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


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.


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.


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.


I live in California for the weather and the fact that other people are here. Government services and infrastructure are below average, in my opinion. Infrastructure is serviceable where I live (Los Angeles) but not reflective of the massive income of the state.

Without the weather, Los Angeles would lose a huge amount of its appeal. All it would have left is the simple fact that a lot of people already live here. But with its weather, it's like a year-round paradise to many people.


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?


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.


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.


That's one anecdotal datum in support of the hypothesis: NH is #12 on the "not enough money to be corrupt" candidate list.

The NH economy is 3% the size of California's, with 5.7% the land area, and 3.4% the population. That suggests it has less than 3% the corruption opportunity, because the state still has to accomplish a lot of the same functions with about 3% as much money. Some things scale by land area or population, and other things are simply flat administrative burden, such as keeping the lights on in the sole state legislature building.

Any person wanting to profit from their own corruptibility would therefore not stay in NH, and would not go to Maine or Vermont, who have even less money to be stolen, but would instead go to Massachusetts, which is #11 on the "enough money to steal" candidate list. And take a ladle, to skim off some of the extra money sloshing around Boston.

This suggests that many of our largest (by money) states could be broken up as an anti-corruption measure, to divide the flows from tax revenues into expenditures into more channels, with less flowing through each. A corrupt person can only fish for dishonest opportunities in one metaphorical river at any one time. How corrupt would Illinois be, if Chicago-Naperville-Elgin-Gary were no longer attached to it? How would California differ if Los-Angeles-Long-Beach and San-Francisco-Oakland-San-Jose were no longer part of it? Would the effect be more pronounced in states where the current capital is not also the largest city: New York, California, Illinois, Texas, Florida?


According to this link someone posted https://www.justice.gov/criminal/file/1096306/download your hypothesis for money = corruption doesn't really hold water. The most corrupt areas (most arrests of government officials by federal law enforcement) per capita are Virgin Islands, Puerto Rico, and Guam.


I don't think corruption can be measured by arrests, as the mechanisms to arrest the corrupt are themselves corruptible. Nor do I think that per-capita is the correct way to compare jurisdictions of dissimilar sizes. With corruption, it is not the number of residents that matters, but the organization of the independently corruptible units of government, and the amounts of money that can be quietly sucked out of them.

The desired metric--that we want to approximate from the more easily obtainable data--is corruption profits per corruptible individual. Each corruptible individual has an incentive to move to places where that metric is higher, thus performing sleazebag arbitrage between those areas where corruption is endemic.

Are the examples you cited outliers, with explainable reasons for poorly fitting the trend?

Could it be that they are all territories, where crimes of corruption by officials at lower levels in the administrative hierarchy would be investigated by the federal Dept. of Justice from the start, without any states' attorneys-general getting a crack at them first or asking the feds for assistance or joint prosecution? If you separate out DC and the island territories, does the remainder of the set hold up?


You are not wrong, but by per capita it is less.

Page 26. UNITED STATES ATTORNEYS’ OFFICES FEDERAL PUBLIC CORRUPTION CONVICTIONS BY DISTRICT OVER THE PAST DECADE (https://www.justice.gov/criminal/file/1096306/download)


Funny Texas looks comparable at a glance in number of corruption convictions, and somehow manages to do this at 0% income tax rate. Kinda rankles less when you don't have to pay for it.


>Easily the most corrupt state I've ever seen

Have you ever seen Illinois?


Hey it’s been at least a couple of years since we’ve sent a governor to jail.


At least Illinois sends its corrupt governors to jail.

https://www.wbez.org/shows/wbez-blogs/long-list-of-illinois-...

Since moving to Alabama, I learned that the county sheriffs get an "allowance" for feeding prisoners in their jails, with little accounting. It should come as no surprise that they buy the cheapest food they can find, without regard to nutrition or foodborne illnesses, and pocket the rest for their private beach-house fund.


> Easily the most corrupt state I've ever seen

You have obviously not spent significant time in New Jersey or Louisiana.


What specifically about the infrastructure are you objecting to besides the aesthetic?


Not the OP, but the ongoing typhus epidemic in LA would be near the head of my list.


Are medical outbreaks something that's typically considered part of infrastructure? At least in GA that's something the CDC would manage.

I considered infrastructure to be roads, sewers, water mains, electrical, etc... not necessarily a medical outbreak.


Funny typhus and hepatitis A outbreaks and rivers of human waste from the tent cities only seem to happen in California.


Typhus is not flu, you need to have the city in a very bad shape to get such an outbreak. Has nothing to do with medicine.


Typhus is a disease spread by organisms like fleas. Fleas can exist in people and animals (e.g. rats). The epidemic in LA is among the homeless and those who have been exposed to them (e.g. city workers).

The problem is one primarily of policy and not due to infrastructure being in disrepair. Stating that a typhus outbreak is due to crumbling infrastructure just outright false.


Typhus is spread by rats and other animals, it is transferred to humans through parasite bites. Rats infestation is an infrastructure issue, at least for me. It could be a policy issue for native Californians though. Should we clear garbage off the streets? Outside California this is not a political question.


> Easily the most corrupt state I've ever seen

Have you only seen California?


> Easily the most corrupt state I've ever seen

Don't get out much?


Uh, have you seen what the rest of the country is like?


Yeah shame on them for not taking their extortion in stride. Their contributions are essential for all that great infrastructure like the new high speed rail between SF and San Diego, oh wait..

https://www.latimes.com/local/lanow/la-me-bullet-train-calif...


Let's be a bit honest here. California public infrastructure has hardly contributed to the windfall people are getting due to their work in the tech industry.


Does the UC system not count as "public infrastructure"?? I wouldn't be surprised if the UCs are the core driver for a lot of California's growth over the decades.


The UC system is a vortex for DARPA and NSF dollars.


Are saying tech workers don’t use public roads or mass transit to leave their homes?


Piblic roads are almost always maintained by the local municipality though and they collect the least taxes of any level of governmwnt yet deliver the most services. I've never bought that argument unless applied to the modern interstate system which was once a Federal responsibility but is now mostly state funded.


Than don't work there. Or try to influence how those riches are spend.


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.


> 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".


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.


Belgium has the highest tax burden of any OECD country. According to OECDs annual Taxing Wages report for 2017, Belgiums total tax wedge for an average earner (the total tax wedge includes employers payroll taxes) was 54%, compared to an OECD average of 36% (US is at 31.7%). The direct "employee visible" part of that is 40.7% vs an OECD average of 25.5% (US 26%).

Based on your line of thinking, people should be fleeing Belgium in huge numbers. Belgium is in the EU and has land borders with Germany, Luxembourg, the Netherlands and France. Germany is not far off in taxes, but France is at 29.1%, Luxembourg at 31%, the Netherlands at 30.4%. Anyone with Belgian citizenship can work and live in any of these countries without having to apply for any visa or work permit. (so far that also applies to the UK, over the channel, but given Brexit I ignored it)

Most Belgians speak French or Dutch, so language should not stop them.

Yet, despite these rather significant monetary incentives to even move across the border, within a short driving distance from their current location, to countries with the same language, there is somehow not a massive amount of Belgians fleeing the country.

Note that this is tax burden for an average tax payer. Not marginal rates paid by the very few.

In other words: Sure, people act on incentives, but unsurprisingly peoples decisions about where to live are not only down to a few percentage points of taxation. Some will move, many won't, and yes, that is something to take into account when setting tax policies.


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?"


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?


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').


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.


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".


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.


Because very often the answer is "the state enabled you to earn that money in the first place, moving things on its roads, and employing workers educated by its school system, while under the protection of its police force and fire service"


I find it enlightening to discuss with people what they would do if they could unilaterally secede.

I find offering the option quite appealing, in the sense that it would hold government strictly to account if it annoys sufficiently large minorities to warrant large splits.

But what the people opposing taxes often tends to forget is that if you want to argue that society should be organized in a fully voluntary way, then the rest of society don't owe you access to any of their public services either if you're not prepared to agree to their terms for interacting with you.

If someone is ok with taking the consequences of that, then, hey, let them, but in my experience the moment you point out the likely consequences, there is a tendency to start crying about how unfair it would be when other people want to exercise their freedoms to refuse to deal with someone not prepared to pay their share. In other words, most of this boils down to wanting to be free to pick and choose how they interact with wider society, without wanting the rest of society to be able to pick and choose how to interact with them.


> people act on incentives. Give them an incentive to leave and they will leave.

This is a very silly statement. The small fraction of people who leave has increased a little bit in size.


Or someone who has already a shitton of money just stop trying to get the most out of it Everytime.


[flagged]


Nonsense. They just send collectors after you unless the delinquency is epic in scale, and even then, they just send better collectors after you unless you show some kind of contempt.

What a bizarre mentality. Enjoy having a large portion of your 'high paying job' eaten up by real estate costs and taxes while people who move out of CA laugh at you all the way to the bank.


See, the thing is the cost of living in those states is actually reasonable. It doesn’t cost $1M for a “starter home”. So we don’t need a “high paying job”, we just need one that pays a reasonable amount.

Also, by all accounts CA doesn’t have a healthy society.

(for the record, I don’t live in the states you mocked, but I live in Illinois which has a similar cost of living)


> Good luck finding a high-paying job there.

Kansas has the lowest cost of living in the country. You don't need to have a high paying job to be living like a king.

I remember having a two bedroom apartment to myself and paying around $500/month. My two friends who settled there found 3 bedroom, 3 bathroom houses for under $300K. They were able to put down around $40K and had a monthly mortgage of around 1K.

They were both in the tech sector there and were making around 80K each which is pretty low compared to SV or other states, but because the cost of living was so low, they were living rather comfortable.


Ridiculous comment. I live in VA and we're doing quite well thank you. Silicon Valley incomes without the state corruption. Our problem is electing a decent governor apparently. I'll take VA over California every time.


I'm enjoying my high paying job in Austin while paying no state income tax, thanks. Moved from SD two years ago, it's great.


Or all the other states with plenty of high paying tech jobs


>It's 13% - that's about the same as sales tax in many places

No, not really.. You're free to choose states with sensible department of revenues.

Wyoming has a 4-6% sales tax, nowhere near the 13% you're arguing about. If capgains of 13% is levied upon 10mil, that's 1.3mil.... while Wyoming's 4-6% sales tax is (obviously less than half that) only levied upon actual purchases (which in practice is way lower).


> No, not really..

Seeing as they're talking about 99% of the world elsewhere, it is reasonable to consider sales tax and VAT other than just the US. The vast majority of the worlds population live in countries with VAT rates at or above 13%

Only 3 European countries have VAT rates below 17% (Liechtenstein, Andorra and Switzerland). 19 countries in the Americas have VAT rates at 13% or above. 16 Asian countries (including China and India) have VAT rates at 13% or above. Only 8 of 55 African countries have VAT below 13%

Most also have capital gains tax and dividend taxes well over 13%


If I'd hit the startup jackpot and found myself with $10M of stock, and wanted to turn it into cash, I think I could afford $1.3M of tax. The remaining $8.7M would keep me pretty comfortable for now.


That's just the bill for state tax (need to consider federal, property, sales tax)


Except that is just state tax. Add in federal and you’re looking at a combined 50%.


Is the article disagreeing with you, or are you saying a couple millions of dollars taxed on a stock sale is, in fact, a small concern?


It's not greed to want to keep your money from an already over-bloated bureaucratic government. On one hand, people complain about government authority and then those same people are happy to grow the government as large and powerful as possible, both through taxes and regulation. Then they cry foul when that double-edged sword is used by people like Trump to do things they don't like.


> near AOC's 70% tax

...For the highest tax bracket.


> AOC's 70% tax

Also doesn't apply to capital gains.


Isn’t capital gains what drives most billionaires wealth?

Last I recall, Jeff Bezos has a salary under 100k, and the rest is from stock.


Also only would apply to income over $10 million.




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