Capitol Alert: Would moving from California to another state save on taxes?


by Dan Walters

Source: Sacramento Bee

When California voters approved temporary sales and income tax increases last year, they rekindled a perennial debate over whether the state's tax burden has become high enough to persuade residents to move elsewhere.

There have been anecdotal accounts of Californians relocating elsewhere, or residents of other states turning down jobs in California because of its taxes, mostly involving highly paid professional athletes. But there are no hard data yet of significant trends in those directions.

A Texas-based conservative think tank, the National Center for Policy Analysis, has entered the debate by launching an interactive website that allows users to calculate the tax effects of moving from one state to another.

Users plug in their personal economic and other data to determine how much they would gain or lose. "The tax burden in a new state can make a huge difference in your retirement plans," NCPA fellow Pamela Villarreal said in a statement accompanying the announcement this week.

As a high-tax state - fifth in the nation in total state-local tax burden as a percentage personal income - California obviously doesn't fare well in the tax-effect comparisons.

The NCPA cites one hypothetical example of a 40-year-old man making $100,000 a year and moving from California to Alaska, saying "he will have an additional $4,213 a year to spend every year for the rest of his life."

The website does not calculate differences in cost of living.