California residents, businesses consider bailing on Golden State over taxes
Business people from San Diego to wine makers in Napa Valley, top-earning Californians reeling from a new state income tax are preparing to pack up and bail out.
“If you have excessive regulations and excessive tax, that’s just not where you want to be,” said Peter Farrell, president of ResMed a medical-device maker in San Diego that employs 600 workers and is considering moving its offices out of state. “California is unfriendly. It’s become an unfriendly business environment.”
One new place to move to is Texas, where the personal income-tax rate is zero, compared to 13.3 percent for top California earners. Then a San Diego based company, Fallbrook Technologies, a maker of variable speed transmissions, recently announced it is leaving for Texas. George Ashley, who is a Nevada tax accountant says he’s received more than 100 inquiries from higher-earning Californians about the possible tax advantages and feasibility of relocating to a state with lower taxes.
“We have had a 10-fold increase from various parts of California, particularly Los Angeles and the Bay Area where many people are seeking a way to leave the state,” said Ashley, who lives just over the California state line in Lake Tahoe, Nev.. “They are fed up with the situation and they feel like they are being unfairly treated.”
The reason these businesses have decided to leave is because voted for Prop 30, a tax-increase proposal by Democratic Gov. Jerry Brown. It may not be so now with this exodus, but the state expects to receive $5 billion to $7 billion annually by increasing the tax rate on households making more than $250,000 a year — and which already pay 62 percent of state income taxes, according to 2010 tax returns. The top 2 percent of earners, households earning more than $450,000, pay 46 percent of the taxes. And those earning more than $1 million — just 34,000 of the state’s 14 million taxpayers — pay 25 percent of the entire states’ taxes.
Fox News contacted a dozen high net-worth residents up and down California. Most talked at length but asked that we keep their identity hidden out of fear of being audited — or, as at least one person said, “harassed” by the California Franchise Tax Board, the state version of the IRS.
“It never stops,” a wealthy San Diego retiree told Fox News. “Pay a little more this year. Pay a little more pay here. Pay another business tax here. There is no end. So we decided to end it, and left.”
Married, with grandchildren in the area, this individual put his house up for sale as soon as Prop 30 qualified for the November ballot. He now lives in Phoenix, having sold two California homes. He claims to be saving $20,000 a month in property and income taxes since relocating.
Another resident who pulled up stakes estimates he’s saving about $30,000 a month. I can’t say I blame them for moving. Government has overspent so long, the only way they can afford their “addiction”, is to raise taxes, which is wrong, they have to cut spending. If this costs the state more money, and lost jobs, they have no one but themselves to blame.
While most of the evidence of an exodus so far is anecdotal, some tax analysts expect the evidence to show up in declining tax revenues from the wealthy by 2014, as they figure out how to legally relocate without actually leaving the Golden State nine months a year.
- Posted in: Business ♦ Current Events ♦ Decisions ♦ Politics
- Tagged: Gov Brown and Prop 30, raise taxes, rich Californians and businesses leaving state
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