Californians fleeing to Mexico

Nov. 30, 2012

By Chriss Street

On Tuesday, President Obama met with the newly elected president of Mexico, Enrique Pena Nieto.  While the press focused on the Administration’s talking points for discussions on a wide range of issues from energy to climate change, the real concern is that the Mexican economy is far outperforming the U.S. economy and the new immigration concern is increasingly from Americans illegally moving to Mexico.

Nowhere is this trend more challenging than in California, which was just awarded the booby prize by 24/7 Wall Street survey, as the “Worst Run State” in the United States.  The state has:

* Unemployment: 10.1 percent (3rd highest);

* Budget deficit: 20.7 percent (17th largest);

* Debt per capita: $4,008 (18th highest);

* Median household income: $57,287 (10th highest);

* Percentage in poverty: 16.6 percent (18th highest);

* The worst credit ratings.

State politicians’ answer to get finances back on track was to convince voters to raise sales taxes and increase the income tax rates for people making more than $250,000 a year to the highest in the nation.  This wasn’t difficult, since 40 percent of Californians don’t pay any income tax and a quarter are on Medicaid.

Residents making $1 million per year saw their state tax burden rise to $96,189 from $87,459 last year.  For every dollar earned over $1 million, the California income tax rate jumps to 13.3 percent.

To complement California’s ludicrously high personal tax rates, the state is also rated as the third-worst business tax climate by the American Tax Foundation.  Forbes Magazine publishes a formula for states that measures how many “makers” (those gainfully employed in the private sector) are necessary to support takers (those drawing state dollars as employees, pensioners or welfare recipients).

A software entrepreneur with 100 employees in San Francisco must support 139 California takers.  The same entrepreneur with 100 employees in Austin only has to support 82 Texas takers.  This punishment of success explains why California’s share of the U.S. economy peaked in 1990 and has shrunk faster than all but three states over the last 12 years.

Goin’ South

California millionaires rebelling from Taxafornia tended to move to the income tax-free states of Texas, Washington and Nevada.  But increasingly, Californians are headed for Mexico.  A Google Internet search for “emigrate to the United States” generates 3.3 million hits. But “emigrate to Mexico” generates 1.3 million hits and the number is rising fast.

Beside low taxes, Mexico has six times the beachfront, half the food prices and a third the real estate costs versus California.

Because Mexico officially bans foreign ownership of land, disallows birthright citizenship and tries to make it difficult for foreigners to find work, there are only 150,000 Americans who live legally in the Empire of the Sun.  But more than one million Americans live in Mexico illegally.

These American expatriates can establish property trusts and take advantage of bank secrecy laws to hide assets from the prying eyes of the IRS and the California tax collectors.  American expats can roll over six month tourist visas for $25 and vehicle permits for $30.  Mexican businesses seldom ask for identification.

Mexican boom

While California’s economy is in the doldrums with 10.1 percent unemployment, Mexico’s economy is booming with only 5.0 percent unemployment.  The Mexican business climate is benefiting from strong production growth and increasing job opportunities.

More than 1.4 million Mexicans — including about 300,000 children born in the United States — returned to Mexico from the United States between 2005 and 2010.  Net immigration to the U.S. dropped to zero since 2008, while American immigration to Mexico is thriving.

UCLA predicts that California’s employment growth will average less than 2 percent for the next three years.  The Economist magazine expects the Mexican boom to continue; since manufacturing costs are more competitive in Mexico than in China:

Mexico is already the world’s biggest exporter of flat-screen televisions, BlackBerrys and fridge-freezers, and is climbing up the rankings in cars, aerospace and more. On present trends, by 2018 America will import more from Mexico than from any other country. “Made in China” is giving way to ‘Hecho en México’.”

A key competitive factor, according to accounting research firm KPMG, is Mexico’s #1 international ranking as the best place to do business from a tax burden point of view.

President Peña Nieto told President Obama he hopes they can work together to create jobs.  The Mexican president also invited Obama to return to his country — he was last there in June for the G20 Summit in Los Cabos.  Obama said he looks for “any excuse to go to Mexico, I’m always game.”  When President Obama visits Mexico, he can wave to all the Taxifornians who have already escaped there.

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27 comments

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  1. Barb
    Barb 30 November, 2012, 09:37

    Interesting! Thanks for the post!

    Reply this comment
  2. lila
    lila 30 November, 2012, 09:51

    Thanks to Brown e.

    Reply this comment
  3. us citizen
    us citizen 30 November, 2012, 10:08

    Im going to have to disagree to parts of this. The food costs in Mexico are the same as here. Going to the grocery store is just like at home. Most of their prices (at the Gigante)are based on the dollar even though its in pesos. The only way it might be cheaper is from some little store out in the boonies. Then you take a chance on food poisioning. Things are left out too long or are not refrigerated.

    We have a condo there so I know. The costs of getting a nice home there is basically on par to here also. If you dont spend 400,000 up for a house, you are living in a dump. And the way they build these houses are horrific. Looking for a square corner………well good luck with that. Earthquake proof…….yeah right. Water running all the time……well maybe. And this is in the posh areas. TV, sometimes.

    I do agree with hiding your assets there (but wouldnt), BUT living there now is taking your life in your hands. You can hear gun shots all night long. Police pull you over for no reason and confiscate your money and possessions in the car. Drug wars are going on in places like Puerto Vallarta, Mazatlan and Cancun. You dont even want to go anywhere near Acapulco. Many cruise ships have stopped going there because passengers are getting mugged on the pier.

    At one time we thought it would be a great place to retire to. Nice house in a expat community, near the beach or lake……..maid service etc. Just like being on vacation all year long. Well we let our condo go two years ago because it is not safe there anymore and you are taking your life in your hands. After 30 years of experience there, I do NOT recommend it to anyone.

    Plus because of the corruption, I would not put my money there at all. And remember you do not really own your land or home so the govt can come in and just take it. They did this to people in Rosarito beach years ago and some of the home owners set their houses on fire before they were forced to leave.

    Mexico is very corrupt.

    Reply this comment
  4. Rex the Wonder Dog!
    Rex the Wonder Dog! 30 November, 2012, 10:42

    I agree with US Cit, the dangers in Mexico today are not worth the risk, not by a long shot. The US State Dept has official warnings for ALL of Mexico today.

    Maybe we can convince Teddy to do a trial run 😉

    Reply this comment
  5. Dyspeptic
    Dyspeptic 30 November, 2012, 11:21

    Although this is an interesting article I am more inclined to believe US Citizens description of Mexico. I would very much like to see Mexico get it’s act together and stop underperforming economically. If the economy down there is so dynamic then why has Mexico’s GDP shrunk as a percentage of world GDP every decade since 1980? And why is there still a large legal/illegal net migration of Mexicans to the U.S.?

    And notice how the Mexican government hypocrites treat foreigners. They demand we treat their citizens like royalty in our country but in their country they treat us like dirt. No land ownership rights, no birthright citizenship, stringent legal residency requirements, harsh penalties for illegal immigration, no voice in Mexican politics for Gringo immigrants.

    Americans are stupidest people on earth.

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 30 November, 2012, 12:45

    90% of the wealth in Mexico is concentrated between 50 families, out of a country of 110 million people, it is the prototypical benchmark of a banana republic.

    Reply this comment
  7. Hondo
    Hondo 30 November, 2012, 13:48

    Some one tell me why the richest man on earth in Carlos Slim, from Mexico, a turd world country. There is no way he could get that much money without being part of the cartel. He is washing some drug money, some how.
    And for Mexicans to be going back to that slaughterhouse that is Mexico now, how bad must things be here?
    Hondo……

    Reply this comment
  8. Rex the Wonder Dog!
    Rex the Wonder Dog! 30 November, 2012, 16:38

    Some one tell me why the richest man on earth in Carlos Slim, from Mexico, a turd world country.
    ==
    Because the country is corrupt and he runs the monopoly phone company, something that could only happen in Mexico, no other legit country would allow it, they just allowed Slim last year to charge 30 cents for every call coming into the country. Cant go wrong with that kind of gaming the system.

    Reply this comment
  9. Ron Kilmartin
    Ron Kilmartin 30 November, 2012, 23:05

    Carlos Slim’s culture is now firmly installed in Sacramento with a super-majority. Another torpedo or two for the SS California, which is already taking on water.

    Reply this comment
  10. Rex the Wonder Dog!
    Rex the Wonder Dog! 1 December, 2012, 06:49

    BTW Teddy, my excellent CA dentist was charging $850 per crown, I loved the guy but could not continue on b/c the costs were too much, even a simple teeth cleaning and x-rays were $200.

    Reply this comment
  11. Ted
    Ted "Eddy Baby" Steele, Associate Prof. 1 December, 2012, 07:55

    My dental is 45 bucks a month– I think yo have Poodle dentures.

    0 for 14 ™ !

    Reply this comment
  12. Ted
    Ted "Eddy Baby" Steele, Associate Prof. 1 December, 2012, 07:56

    Skipper– The Green Door! LMAO !!

    Reply this comment
  13. BobA
    BobA 1 December, 2012, 08:54

    I live in San Diego and while Mexico is a nice place to visit, I wouldn’t want to live there. The police are corrupt as hell and the food and water is unsafe. Sanitation is atrocious and the utility services are unreliable. Kidnapping is also a business just like any other business in Mexico and a cheap and profitable one at that. Plus, the rule of law is subverted by kleptocracy in Mexico and bribery is expected and tolerated.

    Other than that, Mexico is a nice place to live if you don’t mind the flies, the utter corruption in every aspect of life, the cartel murderers plying their trade and the kidnappers patrolling your neighborhood for an easy mark.

    Reply this comment
  14. Ted Steele, Prosecutor
    Ted Steele, Prosecutor 1 December, 2012, 11:40

    Gosh— BobA— almost sounds like you appreciate Cali and our law enforcement/gov…….lol——–I have to laugh at the gadflys on this blog who think LE and gov is soooooo bad here………I know there is alot of room for improvement and size reduction (understatement) but, it’s not so bad. Tut tut…….back to your cubicles….

    Reply this comment
  15. BobA
    BobA 1 December, 2012, 18:45

    Ted:

    Describe a cubicle for me. I’ve heard of one but I’m not sure what you mean when you say back to your cubicle.

    Appreciation isn’t the word I would use. The word tolerate would be more apropos. Unlike Mexico, overt and unchecked corruption is not tolerated here in the USA. We legitimize our corruption by bureaucratizing, unionizing and codifying it into law.

    Reply this comment
  16. Rex the Wonder Dog!
    Rex the Wonder Dog! 1 December, 2012, 21:12

    Mexico, overt and unchecked corruption is not tolerated here in the USA. We legitimize our corruption by bureaucratizing, unionizing and codifying it into law.
    ========
    BobA= 1

    Teddy/Uhaul/Queeg= ZERO!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    🙂

    Reply this comment
  17. Rex the Wonder Dog!
    Rex the Wonder Dog! 1 December, 2012, 21:13

    Teddy Steals, when are you bringing Uhaul and Queen back….isn’t it strange how they BOTH appear (and disappear) in tandem 🙂

    Reply this comment
  18. dltravers
    dltravers 2 December, 2012, 08:58

    Thanks us citizen for your accurate description of what Mexico has become. A little bit of research and “life” under the belt would have done the writer some good. Things are screwed up enough without the myopic perspective used by the writer trying to push a point of religion.

    Reality is real enough without having to fake it.

    The jobs here have played out, thats why southern immigrants are leaving. Many came to work in the housing boom.

    Reply this comment
  19. Ted Steele, Janitor
    Ted Steele, Janitor 2 December, 2012, 09:01

    Poodle– yes— that IS strange—– I know you think they are all me….. but they are not. I delight in their manifestations and muse!

    and you sir….are still…..

    0 for 14 ™!

    Reply this comment
  20. SeeSaw
    SeeSaw 2 December, 2012, 14:50

    You could not pay me enough to go to Mexico–I would rather pay for my dental work in a place where I will be safe.

    Reply this comment
  21. Ted Steele, Janitor
    Ted Steele, Janitor 2 December, 2012, 15:20

    Me too !!

    Reply this comment
  22. Donkey
    Donkey 3 December, 2012, 05:07

    BobA, @#19- “Unlike Mexico, overt and unchecked corruption is not tolerated here in the USA. We legitimize our corruption by bureaucratizing, unionizing and codifying it into law.” Quote of the week Sir!! 🙂

    Reply this comment
  23. BobA
    BobA 3 December, 2012, 09:11

    Donkey:

    Quote of the week indeed. I’ll say this much, at least I respect the Mexicans for their “in your face” naked corruption. Here, we hide it behind the guise of regulatory fees and fines and dare I say, taxes?

    Reply this comment
  24. Ted Steele, Janitor
    Ted Steele, Janitor 3 December, 2012, 18:44

    BobA respects Mexican style corruption……..

    That about says all one needs to know about the level of cwd gadfly posters…..

    back peddle now and then shuffle back to your cubicle…

    Reply this comment
  25. BobA
    BobA 3 December, 2012, 21:39

    Ted:

    Who do even you bother? You embarrass yourself every time you write one of your adolescent comments. Now take your crayons and your coloring book and go play in your room.

    Reply this comment
  26. Rex the Wonder Dog!
    Rex the Wonder Dog! 4 December, 2012, 08:29

    Ted:

    Who do even you bother? You embarrass yourself every time you write one of your adolescent comments. Now take your crayons and your coloring book and go play in your room.
    ==
    🙂 !

    Reply this comment
  27. Ted Steele, Janitor
    Ted Steele, Janitor 4 December, 2012, 09:16

    BobA– Why do I bother? I remember a prof. I had in med school—- she always said…”the answer will reveal itself in the question”…. think about it little buddy…..

    ….and I LOVE that you always respond…..mmmmmmmmm….dreamy.

    Reply this comment

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