Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Published on October 18, 2009 By Draginol In Politics

http://taxprof.typepad.com/taxprof_blog/2009/10/court-upholds-.html

I’d say this is a good call by the court even if I think the law itself to be foolish for California (talk about incenting people to leave).


Comments (Page 1)
on Oct 19, 2009

some of their arguments are suspect, but I can't really see them ruling anything else. It is not unconstitutional since it was amended to allow income tax. It is stupid, it is unfair, it is harmful to society and it encourages them to leave. But it is not unconstitutional.

on Oct 19, 2009

A $10,000.00 minimum... sounds like a moving truck is a lot cheaper, especially when you consider the other taxes paid. Those that can will leave and California will lose the larger percentage these people kick in. Would they be happier if the population of California were migrant farm workers? Perhaps, but even they need roads, schools, and infrastructure. It will be interesting to see what effect this does have down the road.

on Oct 19, 2009

talk about incenting people to leave

Actually, I think this might work. There are a lot of silly liberal millionaires in California for whom no other state is quite crazy enough.

For them the status value of California might be worth more than a few ten thousand bucks a year.

(Personally, if I lived in California, I would leave.)

 

on Oct 19, 2009

Seems like Cali is on a role looking for wayys to make people leave. throw in the whole "banning big screen TVs because they waste too much energy" is just as bad if not worse than this.

on Oct 19, 2009

This is not precisely a tax on millionaires, it's a tax on people that earn in excess of $1 million per year. While it is reasonable to assume that anyone making $1 million per year is a millionaire, not all millionaires make a minimum of $1 million per year.

So while it's perfectly reasonable for someone making in excess of $1 million per year to want to move out of California that presumes that their job which pays them such a high wage is easily transportable and that is not always the case.

In general, jobs pay in relationship to the general cost of living of the area that they are in. You can't assume that a job that pays $1 million in pretty much the highest cost of living area in the country will also pay that same $1 million in Detroit or some other rust belt city or rural area of the country.

If it did then *everyone* that lives on either coast would move to the center of the country. The reason they don't is because the high paying jobs aren't there and if they were there then the cost of living, particularly real estate, would be bid up so as to make that a high cost of living area as well.

So sure, anyone in CA that makes $1 million plus a year that can make that same amount in a low cost area of the country and who also doesn't happen to be tied to a $10 million home is perfectly free to move anywhere they want. However if that $1 million job pays only 1% less in another area of the country then they are better off staying where they are.

on Oct 19, 2009

You think people with an income of one million a year depend on the location much?

I don't know anything about that range of income. I'm not sure the usual idea of "this job pays 100,000/year in NY but only 60,000/year in East-Nowhere, Some-Carolina" formula applies here.

Thinking of California, I figure those people are either owners of companies, who will keep the income from their company in California even if they lived in Idaho, and Hollywood people, who depend on the location but simply won't have that same income on a regular basis. They stay for their project and move away when it is done (or they stay when it is done). I doubt production companies will move out of California because of this.

 

on Oct 19, 2009

You think people with an income of one million a year depend on the location much?


Thinking of California, I figure those people are either owners of companies, who will keep the income from their company in California even if they lived in Idaho, and Hollywood people, who depend on the location but simply won't have that same income on a regular basis. They stay for their project and move away when it is done (or they stay when it is done). I doubt production companies will move out of California because of this.
Seems like you answered your own question.

Companies are located where they are for a number of reasons. Accesibility to customers, accessibility to raw materials, availability of a workforce with particular skills and so on. Companies are not located where they are as an act of charity by the upper management. Just like no employee is hired as an act of charity. If an employee doesn't contribute more to the bottom line than they cost they'd be out on thier ass so fast their head would spin. Perhaps the company was simply  founded there and developed there. Whatever, the companies are there now and to move would require substanstial costs.

Basically CA has said we think the advantages of being in CA outweigh a 1% tax on earnings in *excess* of $1 million. My reading of this is that someone making only $1 million would pay $0 due to this tax and someone would have to make $2 million to actually have to pay a relatively miniscule $10K.

If CA is right then not many people will be going anywhere, if they're wrong then more will leave. But if CA is like any other state that I know of they tax income *earned* in CA regardless of where the income earner lives, so TV and Movie people and company owners would not benefit in the least by moving out of state unless the company moves out as well which is a possibility but far more difficult and costly then simply living "off-site" with periodic commutes.

on Oct 19, 2009

There are a lot of silly liberal millionaires in California for whom no other state is quite crazy enough.

If the number of "silly liberals" found cheating on their taxes during cabinet selections/or in congress are any indicator, they like to hold onto their money just as much (and more i.e. to the point of tax evasion) as anyone else.   

on Oct 19, 2009

If Michigan did that to me I would consider moving.

on Oct 19, 2009

If Michigan did that to me I would consider moving.

Yes, but Michigan is not a liberal mecca and you are not a liberal.

on Oct 19, 2009

If Michigan did that to me I would consider moving.

And so you should. Vote with your feet... it's still a free country at the moment. Those that stay and pony up, my hats off to you as well, and your VP thinks you're a patriot to boot. Win win.

on Oct 19, 2009

Frogboy
If Michigan did that to me I would consider moving.
Of course. No one likes to be singled out for "special" taxes. Think of how smokers feel. I gave up smoking 8 years ago but still object to treating people that aren't doing anything illegal as if they were criminals.

But realistically let's say Michigan did pass an additional 1% tax on earnings above $1 million per year. How much would that really cost you versus the cost of relocating Stardock to some other state or even country? I suspect in the best case you'd be spending millions to save thousands. It's your right in either case, but moving in this situation seems to be a pyrrhic victory.

on Oct 19, 2009

I suspect in the best case you'd be spending millions to save thousands.

I agree in part, but when the total tax picture comes into play, it might be the straw that broke the camels back.

on Oct 19, 2009

But realistically let's say Michigan did pass an additional 1% tax on earnings above $1 million per year. How much would that really cost you versus the cost of relocating Stardock to some other state or even country? I suspect in the best case you'd be spending millions to save thousands. It's your right in either case, but moving in this situation seems to be a pyrrhic victory.

You make a point but you ignore a simple fact. Its the principle of things. Imagine that the Gov't would come up with a tax that some would consider working in another state to avoid paying it yet most would see it's not really much and chose to stay and pay it. But you have to ask yourself, with all the taxes the Govt already has why another? Because they can? It's not about how much money you spend moving vs how much you pay in this 1% tax. It's the principle. I would be convinced to move, even if it cost me more, if I believed the tax would go against what I believe in.

You are looking at this from a mathematical point of view, we see it from an abusive point of view. The Gov't continues to come up with ways to take more money from people, using the excuse that they have enough to spare, and ignoring the fact that the economy is not getting better and those that have more don't have as much as they had before and taking more from them leaves them with even less and we all know that in order to make money you have to spend money. but how do you spend money you don't have and make money when people don't have jobs?

on Oct 20, 2009

You are looking at this from a mathematical point of view, we see it from an abusive point of view.

Charles when you look at it that way you have to consider both. It is mathematical. You're taxed on your money twice, once when you earn or save it and again when you spend it (with some small exceptions). Not saying it that can't be abusive, I believe it is, but it's always going to boil down to the numbers. Since conditions are more likely to make every poor rather than rich, and numbers of the earners lean more to the lower side, that's where the votes go. The mentality, with encouragement of vote seeking politicians, is it's better to eat roasted goose today than wait for the golden eggs tomorrow.