Category: California

I was chatting with a software engineer who has been at Facebook (“Meta”) for about 10 years. His wife works an Excel-oriented analytics job for a company on the Peninsula. After their employers went 100-percent remote, they began spending more and more time in Hawaii. They grew to love it out there and now have purchased a family-sized house in Hawaii and are planning to move there full-time. Together they probably earn between $500,000 and $1 million/year. They’ll stop paying over $30,000 per year in property tax in California and start paying property tax on a multi-$million place in Hawaii. They’ll stop paying California income tax and begin paying income tax to Hawaii. What about schools? “The public schools in California are terrible,” said the Facebooker, “and the private schools are extremely expensive and in depressing facilities. The public schools in Hawaii might be even worse, but the private schools are cheap and they’re in beautiful natural settings between the beach and the mountains.”

This is plainly not a financially motivated move. Hawaii’s Department of Taxation proudly states that it is one of the highest tax places in the U.S.:

Hawaii has one of the highest income tax burdens of any state for all income levels

… The state ranks between first and the third place for highest income tax burden for every income level. Hawaii has the highest tax burden for very high-income taxpayers making over $500,000 filing single and $1,000,000 filing jointly, highlighting the progressivity of the state’s brackets.

In addition to paying high taxes, they’ll incur higher-even-than-California prices for many significant items.

This is a move that never could have happened, however, if California hadn’t developed a culture of maximum coronapanic, which necessarily spawned a culture of remote work.

Maybe Shohei Ohtani moving in to collect $700 million will help Gavin Newsom? ABC says he’ll likely pay California tax on only 3 percent of the headline number:

The Dodgers will pay Ohtani $20 million over the next decade, when the baseball star will be hitting and, health permitting, pitching for the National League powerhouse.

It’s the decade after that when the Dodgers will really start to pay Ohtani — $68 million per year from 2034-43. Ohtani will turn 40 in 2034, an age when most Major League Baseball players have retired. By then, Ohtani could stop playing baseball and choose not to live in California, potentially avoiding for the bulk of his salary the state’s 13.3% income tax and 1.1% payroll tax for State Disability Insurance.

With 97% of Ohtani’s Dodgers income deferred, it means California — where there is an estimated $68 billion budget deficit this year — will have to wait at least a decade before it can collect taxes on the bulk of his salary, if it can collect at all. California could collect taxes from Ohtani’s significant endorsement deals, assuming Ohtani is a California resident.

Loosely related, one of my favorite Hawaii snapshots, captured on 6×6 cm film with a Rollei.

(I personally wouldn’t want to live in Hawaii. The topography makes it mostly impossible to build standard walkable/bikeable towns and cities with a grid of roads. The typical Hawaiian island is a strip of development on a ring road and that ring road has become extremely congested. For those who love Asia, Hawaii seems like it might be a reasonable choice, but it is a 9-hour flight to Tokyo and 11 hours to Korea. You’re not going to go to Asia for a long weekend.)

Related:

• “The wealthiest Californians are fleeing the state. Why that’s very bad news for the economy” (LA Times, December 2023): “… in the years 2015-16, an individual or couple who had moved from California to Texas reported an average income of $78,000, about the same as Texans who relocated to California. But by 2020-21, California transplants in Texas reported an average income of about $137,000, while tax returns from former Texans who moved to California showed an average income of $75,000. The income gap between those coming into California and those going out is even bigger when it comes to Florida, which, as far away as it is, has become a top five destination for emigrating Californians.”

“Under the 10 Freeway: Immigrant businesses scraped by while landlord dodged Caltrans” (Los Angeles Times):

Their landlord, Apex, owned by Ahmad Anthony Nowaid, had failed to pay rent on the 48,000-square-foot triangular lot at South Alameda and East 14th streets for more than a year, and owed $78,000, according to Caltrans, which sued the company for back rent in September.

The property was one of five that Caltrans was attempting to evict Apex and another Nowaid company from, including a plot along the 5 Freeway in Sun Valley and another a block away from the fire. All told, Nowaid owed about $620,000 to Caltrans in unpaid rent as of September, the agency said in court filings.

In April, court records say, a Caltrans employee visited the lot and told tenants to stop paying their rent to Apex as the state planned to evict the company.

Several tenants, including Serafin, said they stopped paying Nowaid this month after receiving notice from the court to appear for the lawsuit in December. They said that the moment they stopped paying rent, Nowaid threatened to lock the gates again.

The story is interesting because you’d think that the government would have great access to its own courts, yet a California state agency was apparently unable to use the California state courts to evict a nonpaying tenant. Via their strong tenants rights laws, Californians managed to flambée their own 10-lane freeway (not sure if freeway is masculine or feminine in French, but in California it can identify as any gender, presumably).

Separately, the headline references “immigrant businesses”. Diversity was supposed to be the freeway’s strength. The primary tenant was named “Ahmad”, an Arabic name that is a diminutive of “Mohammed”. The article describes the subtenants as immigrants from Mexico. As a group, they should have been super strong, yet the article describes the result as economically marginal.

“I lost everything,” Serafin said. “We are not educated people. Most of the people are people that crossed the border, work hard, or maybe grew up here. But we are working-class people. We break our back to barely make a good living.”

The triangular tract was chaotic, with no clear entrance or address, and with unhoused people living in tents and trailers outside its gates. Graffiti was scrawled around the perimeter. Inside, workers and equipment shared close quarters amid the stacks of pallets.

Serafin said fires regularly broke out in encampments around the property, but calls to police or for cleanups often went unheeded. He and others would sometimes pay homeless people $20 just to move away from their businesses.

“We’re living paycheck to paycheck,” said Jose Luis Villamil Rodriguez, 53, who had a mechanic stand under the freeway.

Maybe it works better for private landlords? An aviation friend owns some apartment buildings in California. He says to budget $80,000 to $200,000 in legal fees to evict a tenant who doesn’t pay rent and 1-2 years of time, but “if the word ‘Covid’ is mentioned they get 4 years.”

Someone torched a homeless encampment and a pallet storage facility underneath a 10-lane freeway, melting the guard rails and resulting in a shower of concrete that had been supporting the freeway. A gaming enthusiast striving for a high score in Grand Theft Auto? No. Real life in Los Angeles this weekend. The Daily Mail:

Coincidentally, our tender 8- and 10-year-olds were at a birthday party this weekend where the hosts brought in a “gaming truck” with Xbox. Their mom was supervising, saw Mario on the outside of the truck, and decided that it would be okay if the boys played “a racing game”. At dinner, the boys recounted the fun that they’d had smashing into buildings, running over criminals, stealing and punching, etc. “Were you playing Grand Theft Auto?” I asked. “Yes, that was the name of the game!” they responded.

I had always thought of Grand Theft Auto, which I’ve never played, as American. What other country has a lot of cars and social decay? Wikipedia, however, says that the creators are Scottish.

Proving that there is always balance in the universe, just as Los Angeles was being trashed by this fire San Francisco was being cleaned up. Also from the Daily Mail… “Outrage as San Francisco boots vagrants off streets ahead of Xi Jinping visit – as California Governor Gavin Newsom admits woke city was only given polish to impress world leaders”:

• In the span of a few days, the city scrubbed seven intersections in the notorious Tenderloin and South of Market – leaving the hotspots almost unrecognizable
• Where tents were once propped up, sidewalks are clear and spotless. Locales where homeless once congregated are cleared, video from the sites shows
• Hangouts along Mission Street and Market are no more, along with an open drug market that for over a year has been outside the Nancy Pelosi Federal building
• Last week, California Gov. Gavin Newsom admitted the clean-ups were only done to provide a good impression for visiting world leaders

Gavin Newsom said that the idea of a border wall was “a monument to stupidity” and “a distraction” when Trump proposed it. Here’s the new San Francisco border wall:

Let’s check on traffic in LA at 10:30 am on a Monday:

It doesn’t look worse than usual!