My California Facebook friends are still lamenting the new tax rates and advocating for California to run a charity-in-lieu-of-state-tax scam (see nytimes).
What is the top rate in California for personal income tax?
- 37 percent federal
- 13.3 percent state
(There is also the 3.8 percent Obamacare tax, but it applies only to capital gains and dividend income, which generally start from a lower base rate.)
The total top tax rate, therefore, is 50.3 percent and it applies only to people with higher-than-median incomes. The folks who say that this is intolerable were previously posting suggestions to return to an Eisenhower-era tax rate of 90+ percent (but people worked around this by paying at the capital gains rate). If they advocated for 90 percent on high incomes, why is 50.3 percent on high incomes intolerable to them?
What will be the rate in Massachusetts?
The ONLY thing I like about California is the weather and the fact that the tech companies I work for congregate in silicon valley.
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The CA State Government represents 180 degrees the opposite of my views on taxes, on social issues, on entitlements, on education, on regulations, on immigration, on the environment, on labor laws, on guns, on race relations, on EVERYTHING. The CA State Government is MY ENEMY. Every year I work from Jan to May just to pay my taxes. And, every time I file my returns a little part of me wants to take up arms against these vermin. The CA State government is a bigger threat to my values, my beliefs, my freedom and my future than all the terrorists, all the rogue regimes and all the criminals in the world combined.
Massachusetts has a flat 5.1 percent income tax rate (the righteous approach of soaking the rich with a higher rate is prohibited by the state constitution; see https://taxfoundation.org/massachusetts-may-set-its-income-tax-rate-constitution-how-unusual/ ).
So add 37 and we get 42.1 percent.
On the other hand, the California constitution prevents levying an estate tax. Massachusetts collects 16 percent tax on a person’s savings at the time of death. So it would make sense to live and work in Massachusetts and then retire and die in California (or just live, work, retire, and die in Texas, Florida, or Alaska, and pay no income or estate tax; see https://taxfoundation.org/weekly-map-inheritance-and-estate-tax-rates-and-exemptions/ ).
For comparison, Switzerland has a maximum income tax rate in the 22-40 percent range (depending on canton; see http://www.nomoretax.eu/living/relocation-to-switzerland/ ).
https://www.ch.ch/en/taxation-inheritances/ says that there are no death or inheritance taxes when assets are passed down from parents to children.
Singapore recently raised its top rate from 20 to 22 percent: https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Income-Tax-Rates/
There are no death taxes in Singapore (see https://www.iras.gov.sg/irashome/Other-Taxes/Estate-duty/ ) and there is no capital gains tax, apparently.
Estonia seems to be the lowest-cost base for a high-income EU resident. See
https://taxfoundation.org/estonia-has-most-competitive-tax-system-oecd/ for the roughly 21 percent tax rate on income and lack of any estate tax. The tax savings will pay for a villa in Sicily for December and January!
Because “high incomes” always means someone who makes 1.5x+ of whomever is saying it.
They advocated for higher taxes when they assumed it would be other people’s high taxes.
I should note that I think the combined rate for high-income MA residents is almost the same as before (39 percent plus 5+ percent deductible against the 39 percent versus 37 percent plus 5+ percent not deductible).
Why do they object? Because they are innumerate. They have barely the slightest intellectual ability to use and understand numbers intelligently. They are also in the midst of a deep state of collective hysteria.
A young woman told me that anatomically modern humans have been around for “four or five centuries.” She lacked the basic sense to independently discard this stupid idea. And yet she was well versed in the new doctrines of radical sexual ambiguity celebrated at Google.
I would hazard that less than one out of twenty adults could intelligently talk about government revenue and spending, yet everyone has a strong opinion on the matter. If they went to Harvard, they likely do not know the difference between medicaid or medicare.
Shucks, the intellectual difference between speed and acceleration was not formalized mathematically before Newton. Four or five centuries ago, you and I would be just as stupid as the young woman I mentioned.
There are ways to make the point clearly to those fortunate enough not to be thoroughly indoctrinated at schools of higher education: complain about the sales tax. This will make them complain about payroll taxes. A clerk at Home Depot iluminated this angle of argument.
Whereas I lamented I had less money to spend on booze due to the sales tax on a christmas tree, she caught the angle of argument and said she would spend the extra money from recaptured payroll taxes on entertaining younger men. An intuitive understanding of the problem that any orgy-going bro-topian programmer from California might appreciate, were he courageous enough to think it.
I have a vague notion that a Hegelian framework of thesis, antithesis, and synthesis are at play here, or just a general theory of consciousness with a strongly historical perspective, with a special caution not to over-privilege the “now”. I believe that particular bigotry has been called “present-ism”, but why litter the linguistic landscape with new jargon, when “modernity” and all of its veneration of the new suffices to express the progressive notion of the past versus the present and the future.
Now, have I obscured the issue through cant and or provoked rough but useful context for considering the problem generally?
In reality, at this point in the business cycle Congress should be reducing the deficit to $150 billion per year. Instead, Congress has increased it by $150 billion per year. In reality, the single most important way of managing the government spending side of the equation is constraining the growth of health care costs. Instead, Congress has undermined the only policy in the past two decades which has done anything to constrain those costs without even a glimmer of a replacement. It may be that that the tax bill makes some second or third order improvements to US tax policy. In reality, those improvements are likely offset by the new irrationalities which were added to US tax policy.
Ignoring all of this by focussing on some Californians complaining about their taxes going up with an air of smug superiority is, well, remarkable.
@Neal #9, or maybe we should ask why our government keeps spends money on programs it does not have the money for? Or running projects that run out of control?
A responsible person will not max out his / her credit card, but will live with the means he / she can afford and manage. Looks like our government is over spending, over promising and under delivering as such it is dumbing down its citizens into doing the same.
“maybe we should ask why our government keeps spends money on programs it does not have the money for?”
Probably because it is politically easier to cut taxes or raise spending than it is to raise taxes or cut spending.
It isn’t really clear the problem is only on the spending side. Total government spending as a percent of GDP is lower than most comparable countries. Even on an absolute per capita spending basis, US government spending is really at most on the high end of average for comparable countries (no Singapore is not a comparable country). Given that two big areas of spending (health care and military spending) are really quite high in the US and two other big areas of spending (social security and education) are average as a percent of GDP but high on a per capita spending basis, this suggests that government spending in most of the other areas is actually pretty modest on both a per capita and percent of GDP basis.
Not a spending issue? California collects 11 percent of residents’ incomes (https://taxfoundation.org/state/california/ ). Texas collects 7.6 percent (https://taxfoundation.org/state/texas ). Since states aren’t supposed to run deficits and can’t print money, California spends roughly 45 percent more than Texas does.
Maybe Californians get better government for this extra money? https://www.nytimes.com/2015/10/27/upshot/surprise-florida-and-texas-excel-in-math-and-reading-scores.html shows that California public schools, adjusted for demographics, are some of the worst in the United States (Texas is right near the top).
George is wrong when he suggests that California is spending money it doesn’t have? California, despite these higher collections, has a lower bond rating than Texas. See http://www.treasurer.ca.gov/ratings/current.asp ; California is close to the bottom among the states; only imminently-insolvent Illinois seems to be worse.
“Not a spending issue?”
I don’t think I said this. Please quote back the words I used where you think I said this so I can clarify what I meant and try to use better words in the future. I’m not inclined to let you dodge the points I made in comment #11 by shifting the discussion to the comparative merits of the Texas and California approaches to government spending.