Since California voters have voted to make the temporary “soak the rich” state income tax essentially a permanent levy, it’s worth looking at just what this means for the wealthy, and what their residency options are. Here’s a summary of the California state individual income tax, compared with the other 49 states. It is excerpted from my dreary fact sheet “California vs. the Other States”:
I’m posting the helpful chart comparing brackets — a newer chart than I’ve referenced before. New though it is, it’s already outdated:
1. Tennessee has TOTALLY repealed their state income tax. Previously they taxed only interest and dividends, but they’ve dropped that tax starting in 2016.
2. New Hampshire also exempts earned income — taxing only interest and dividends at 5%.
EXCERPT: Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at under $50,000 for people filing as individuals. 10.3% started at $1 million. Now our “millionaires’ tax” rate is 13.3% – including capital gains (CA total CG rate now the 2nd highest in the world!). 10+% taxes now start at $250K. CA now has by far the nation’s highest state income tax rate.
We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest – including 8 states with zero state income tax – and one state (NH) that tax only dividends and interest income.
CA is so bad, we also have the nation’s 2nd highest state income tax bracket. AND the 3rd. AND the 4th!
http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff2013.pdf Table #12
and
One other point to consider in this matter: The incentive for the rich to leave California may grow substantially if one sensible Trump reform is adopted — the elimination of the deductibility of state taxes on federal returns in exchange for lower federal tax rates. Liberal high-tax states are aghast at the thought!
