Toyota workers who move to Texas from California could save big on taxes
In addition to beautiful bluebonnets in the spring, Toyota workers who move to Texas when the automaker consolidates U.S. operations in Plano could also enjoy significant tax savings over their lifetimes.
by Sheryl Jean
April 29, 2014
Source: Dallas Morning News
Toyota employees who decide to move to North Texas from California stand to gain significant tax savings over their lifetime, according to data from the National Center for Policy Analysis' state tax calculator.
Toyota said yesterday it will consolidate three North American business headquarters at a new campus in Plano, investing $300 million and generating about 4,000 jobs. Those jobs include people who may move to North Texas from California, Kentucky and New York.
"In general, people of all incomes will save in Texas," said Pamela Villarreal, senior fellow at the conservative public policy research group. "People will save on the lower cost of living in Texas, but depending on their income and property taxes, they may not save a whole less."
The overall cost of living in Plano is about 31 percent lower than in the Los Angeles-Long Beach area, which includes one of the Toyota headquarters in Torrance, Calif., according to ACCRA indexes.
NCPA's calculator computes the difference in the amount of federal and state income taxes, property taxes and sales taxes you a person would expect to pay over a lifetime when moving from one state to another. It asks for your marital status, birth date, annual earnings, Social Security benefits, savings and monthly rent or home value and mortgage information.
Villarreal supplied two examples. For both, she estimated housing values in California are about double what they are in Texas (based on the ACCRA cost-of-living indexes for housing) and assumed the Toyota corporate jobs would be relatively high paying.
1. A 30-year old single California woman earning $75,000 a year and paying $2,200 in rent a year (vs. $1,100 in Texas) could gain $14,909 in discretionary income by moving to Texas. If saved and invested that would amount to about $1.5 million over her lifetime.
2. Forty-year-old married California homeowners earning $150,000 a year could gain $2,535 a year in discretionary income and more than $209,000 over their lifetime. Villarreal estimated their home value at $500,000 vs. $300,000 in Texas, with a zero mortgage balance in each case.
In the second example, the calculator takes into account property taxes, "which are pretty high in Texas," Villarreal said. So, that couple saves "some money, but not a whole lot" because Texas' property tax rate is about double what it is in California, she said.