CA imposes taxes near highest in the U.S.

CA imposes taxes near highest in the U.S.

taxesIf Tax Day 2014 had you feeling down, consider how much less you would have paid in another state.

According to a report on state and local tax rates published by WalletHub, California has the second-highest local and state tax burden in the country. The average resident of the Golden State, according tho the survey, pays $9,509 in annual state and local states.

That puts California 36 percent higher than the national average and with the second-highest state and local tax burden in the country. The only state with a higher state and local tax burden is New York.

“Economic mobility – that is, our ability to climb the proverbial ladder – has a strong correlation to where we live,” writes WalletHub’s John Kiernan.

The WalletHub tax analysis took into consideration eight different taxes: real estate taxes, state and local income taxes, vehicle property and sales taxes, overall sales and use taxes, fuel taxes, alcohol taxes, food taxes and telecom taxes.

Tax Freedom Day on April 30th

WalletHub’s local and state tax findings are bolstered by the Tax Foundation’s annual report on state and local tax burdens. In 2014, it placed California with the fourth highest state and local tax burden in the nation.

The average Californian, according to the Tax Foundation survey, pays 11.4 percent of their income to state and local governments. That means, the average taxpayer must work until April 30, just to pay the government’s share.

There’s some reason to believe that the Tax Foundation’s numbers are skewed toward a lower tax bill. Its report used figures from 2011, which was before Proposition 30‘s $7 billion increases on sales and income taxes took effect in California.

California’s high poverty, high cost of living

California’s tax burden is compounded by a cost of living that vastly exceeds the national average. California has the highest poverty rate in the country, under the U.S. Census Bureau’s Supplemental Poverty Measure, which takes into consideration cost of living. Roughly 9 million Californians live in poverty under that metric.

In contrast, the official poverty rate, which was created during the Johnson administration’s “war on poverty,” leaves California with an official rate of 16.5 percent, which is higher than the national average but surpassed by other states. The official poverty threshold is three times the cost of a minimum food diet, with annual revisions based on inflation. Critics point out that such a rate does not vary geographically.

High burden of local and state taxes

With substantial differences in the cost of living and taxes for each state, the result is an American Dream limited by geography.

“The United States has historically been viewed as the ‘land of opportunity,’ a society in which a child’s chances of succeeding do not depend heavily on her parents’ income or circumstances,” a team of researchers at Harvard University and the University of California, Berkeley wrote in a July 2013 paper.  “But there is growing evidence that intergenerational income mobility in the U.S. is actually lower than in many other developed countries.”

“The U.S. is better described as a collection of societies, some of which are ‘lands of opportunity’ with high rates of mobility across generations, and others in which few children escape poverty,” the researchers concluded in January.

Precursor for tax revolt

California’s high tax rates has some questioning whether it will inevitably lead to another tax revolt, akin to Proposition 13 in 1978.

“On Tax Day 2014, California is creeping toward a point that the issue of taxation may once again be selected as the main concern for the state’s voters,” Joel Fox, the publisher of Fox and Hounds, recently predicted.

Yet, he also acknowledged how far-fetched that might sound.

“That might seem an irrational statement when you consider that in the most recent Public Policy Institute poll, taxes as a concern were ranked sixth behind, in order, jobs and the economy, water/drought, education, immigration and health care,” he wrote.

States with the Lowest Taxes (vs. National Avg.)

  1. Wyoming (-66%)
  2. Alaska (-60%)
  3. Nevada (-52%)
  4. Florida (-48%)
  5. South Dakota (-46%)
  6. Washington (-45%)
  7. Texas (-25%)
  8. Delaware (-25%)
  9. North Dakota (-20%)
  10. Colorado (-18%)


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  1. S Moderation Douglas
    S Moderation Douglas 16 April, 2014, 10:07

    “The average resident of the Golden State, according tho the survey, pays $9,509 in annual state and local states.”

    John Hrabe:

    CWD has posted this BS twice at least, already.

    It was incorrect the first time.
    It was incorrect the second time.
    It is still incorrect.

    Society of Professional Journalists Code of Ethics

    FIRST RULE, literally:

    “— Test the accuracy of information from all sources and exercise care to avoid inadvertent error. Deliberate distortion is never permissible.”

    The state/local tax burden for California is $5,136 according to the latest figures available, and California is ranked fourth highest, not second. (The national average is $4,217, so, “36% higher” is BS PHD)

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 16 April, 2014, 14:07

      Oh, we are only FOURTH, not second, what a RELIEF….LOL!

      Thanks Doug, I needed the relief, it has bee a rough day 🙂

      Reply this comment
      • Bob
        Bob 16 April, 2014, 17:58

        Yeah, Doggiehouser there really cracks me up.



        I guess we are just supposed to thank those gun running Demoncrats for doing such a bang up job.

        Reply this comment
        • S Moderation Douglas
          S Moderation Douglas 17 April, 2014, 11:16

          I never denied the poverty rate. I never said anything about the poverty rate.

          And I agree, there is little difference between second highest taxed state and fourth highest.

          Simple statement of fact: an “average” is:

          ” the result obtained by adding several quantities together and then dividing this total by the number of quantities; ”

          A fifth grader can do it. The figures are available from US Census Bureau. Tax Foundation and others have been compiling this data for years. The latest figures available are from 2011.

          California average state/local tax burden is $5,136. There may not be a large difference between “second highest” and “fourth highest” taxed state, but there is a huge difference between $5,136 and $9,509.

          And all the other figures from WalletHub are wrong. California taxes are NOT 36% higher than the national average.

          The author mentions the higher poverty rate and higher cost of living in California. We can only guess why he did not mention the average income is also higher than the national average. Doesn’t fit the agenda?

          Reply this comment
  2. Steve Mehlman
    Steve Mehlman 16 April, 2014, 10:47

    SM Douglas: You are using FACTS as your argument? HaHaHaHaHaHaHaHaHa! The ‘Dog believes that all taxes are evil, and no FACTS you can cite will change that. Or maybe you think CWD is “fair and balanced?” That’s even funnier.

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 16 April, 2014, 14:11

      Steve, “facts” are not even in your vocabulary 😉
      If they were you would know the average CHP officer who has retired with 30 years in during the last 36 months receives a “modest” $94,000 pension. One of those “modest” pensions according to Billy Lockyer 🙂

      Reply this comment
  3. Gary
    Gary 16 April, 2014, 10:56

    Why don’t you put your sources, Douglas?

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 16 April, 2014, 12:52


      2014 Facts and Figures

      Same one cited in the article.

      They have been doing this since the 1940s.

      They are not really “skewed” as the article suggests, WalletHub uses the same data, they just butcher it.

      Or search ITEP state/local tax burden. They are in the same ballpark as TaxFoundation. TF says Californians spend a little over eleven percent of income on state and local taxes. ITEP says about ten percent.

      Or search “Washington DC state local tax burden study”. They compare total taxes for a family of three at five different income levels in the major cities of each state.

      ALL the major studies are in the same ballpark except WalletHub. NOBODY comes close to a $9,000 average for California.

      Wallethub is the Murphy’s Law of tax data. Whatever could be screwed up, they screwed it.

      Reply this comment
  4. Ulysses Uhaul
    Ulysses Uhaul 16 April, 2014, 13:48

    Time to Pack and Ship!

    Reply this comment
  5. S Moderation Douglas
    S Moderation Douglas 16 April, 2014, 16:52


    You don’t need facts. If you have BS that fits your agenda, you’re good to go.

    WalletHub puts out a phony study that says Nebraska is the THIRD highest taxed state in the nation. (It’s twenty fifth according to most other studies)

    Your Governor of Nebraska. What do you do?

    A. Call your chief of staff and have her verify the data.
    B. Call a fifth grade math teacher and have her explain how to calculate “average”
    C. Issue a statement saying “the report is “additional proof that Nebraskans need responsible and meaningful property and income tax relief.”

    If your a DA Republican governor, it’s okay to use whatever fits your agenda. Truth be damned.

    Here’s clue number one: even John Seiler doesn’t pay $9,509 in state and local taxes. And HE is taxed at 50%.

    Reply this comment
  6. DavidfromLosGatos
    DavidfromLosGatos 17 April, 2014, 11:10

    Perhaps I can give a better example of CA taxes, since we are evil 1% wage earners. Our CA AGI was $943K (line 14, form 540). We took only the standard CA deduction ($8K), and had CA taxable income of $935K, with a corresponding CA income tax liability of about $90K (married filed jointly). We can deduct about 85% of the CA tax on our fed return, at a marginal fed tax rate of %40, so our net out of pocket CA income tax is about $60K (i.e., fed subsidizes about 1/3 of our CA income taxes), and our true 2013 CA income tax rate on $943K CA AGI is around 6.4%.

    It is what it is.

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 17 April, 2014, 12:07


      Are you familiar with ITEP’s distributional analysis? What you are describing, they refer to as “federal deduction offset” see “complete report (PDF)

      The interesting thing about California’s state/local tax is that the highest income earners pay MUCH higher taxes than high income earners in most other states……………BUT, their state/local tax as a percent of income is LOWER than the national average for all income groups.

      According to ITEP:
      ” Most significantly, the report concludes that all states have regressive tax systems that ask more from low- and middle-income families than from the wealthiest. 

      It also finds: States praised as “low tax” are often high tax states for low and middle income families.”

      “It is what it is”
      I like that.

      Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 17 April, 2014, 20:44

      David, I have never in my life heard of a person with an AGI of $900K+ taking a STANDARD deduction- ever.

      You’re not messing with us, like Teddy Steals does, are you!

      Reply this comment
      • DavidfromLosGatos
        DavidfromLosGatos 18 April, 2014, 07:45

        Rex Dog,

        If you favor high taxes on high wage earners, you will be pleased to know that California has a much more aggressive phase out of itemized deductions. Per the CA FTB: “Itemized deductions must be reduced by the lesser of 6% of the excess of the taxpayer’s federal AGI over the threshold amount or 80% of the amount of itemized deductions otherwise allowed for the taxable year. For “Married filing jointly,” the threshold is $339,464.

        In any event, CA state income taxes is by far our highest (mostly) deductible on fed Sch. A, and CA taxes are not deductible on CA tax liability. Property Tax is next highest.

        So, what we are left with after excluding CA income taxes and applying the 6% phase out is lower than the $8K standard deduction.

        Reply this comment
  7. DavidfromLosGatos
    DavidfromLosGatos 17 April, 2014, 11:25

    And FWIW, the new Obamacare tax that started in 2013 cost us more ($8.2K) than net CA prop 30 increase (6.2K) because of the 33% fed subsidy. On the other hand, combined with the fed rate increase on top bracket, our income (+ Obamacare) taxes were about 4% ($38K) higher than would have been owed prior to the tax hikes. Your mileage may vary.

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 17 April, 2014, 12:43

      So, here’s a personal question; feel free not to answer, of course.

      IF ITEP’s state/local tax rates are anywhere near correct (your mileage may vary)

      The approximate rate for the top one percent in California is 8.8%,with the federal offset.

      In Washington state, it is 2.8%.

      Is that six percent difference enough to tempt you to move to Washington?

      Six percent of $935,000 is more than I make in a year, so everything is relative.

      No one on this board considers the “one percent” to be evil. Unless, of course, he’s a law enforcement officer or firefighter.

      Reply this comment
  8. DavidfromLosGatos
    DavidfromLosGatos 17 April, 2014, 14:41

    8.8% may actually be low for the super high AGI, since the fed subsidy phases out 3% per $100K AGI. For example, uber-evil Phil Mickelson does not get any CA income tax subsidized by fed deduction, and his overall CA tax rate approaches the 13.3% marginal rate (I know, a good problem to have….).

    The honest answer to the “tax breaking point” is “it depends”, which is why Laffer drew a curve instead of a vertical line. Everyone has their reasons that they live where they live; income tax rates are just one factor. Smug Jerry Brown knows he has a captive audience to stick it to with prop 30, since many high AGI people are stuck in CA to get their high AGI. If they leave the state, their income tax savings are lost due to their overall income reduction. CA government employees get their vig!

    To answer for ourselves: We plan to leave CA in a few years, when my wife retires, because her income is tied to CA, and mine not so much. We like living here for the most part, but there are other parts of the country we also like, and having a tax reduction help subsidize the move is nice (but not enough to accelerate our move).

    Back to Phil M: If it’s true he is/was pulling down $50M AGI, then his CA income taxes are around $6.5M, with ZERO fed deduction. He must really like living in CA.

    Reply this comment

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