Today’s closing price for silver is $32.72 an ounce. Meanwhile, Gold is $1,749.35 an ounce. So how can silver be better than gold?
If you’ve been a reader of this blog, you’ve seen me write numerous times about California’s tax and economic policies. Bluntly, if California were a corporation, it would be delisted from the Pink Sheets. (For those unfamiliar with the “Pink Sheets”, that’s the home for stocks that get delisted from the NYSE, American Stock Exchange, or NASDAQ.) Meanwhile, the only recipe that Democrats in Sacramento have is to increase taxes.
My tax bite is roughly 10% to California. For every dollar I make, ten cents goes to Sacramento. (Yes, I get a benefit from that in that state income tax is deductible on federal tax. However, because of the Alternative Minimum Tax even that benefit is capped.) For the past few years I’ve considered if I could move my business to a friendlier environment. Earlier this year, I decided to do so.
I’ve sold my house in Irvine, and am in the process of purchasing a home in the Las Vegas area. I will be in a much friendlier business environment, with a lower cost of living. The home I’m purchasing is nearly double the size of my current home and costs almost 50% less than what I sold my current home for.
There comes a point where decisions are forced on you. With the growth of my business, I looked at possibly hiring another tax accountant in 2010. When I ran the numbers, I found that I would lose money by hiring a productive tax accountant. That’s because of all the regulations and costs that I would immediately incur if I had an employee. I’m not stupid: If I lose money by hiring someone, I’m not going to do it.
Yet my business was (and is) growing, and I had to do something. As you may know, I’m adding a partner (Aaron Lion, E.A.). He’s based near D.C. rather than California. As of a week from now, I will have executed my own Escape from California.
Democrats in Sacramento constantly say that with all of California’s advantages (and the state does have a lot: great climate, a large diverse population, and diverse industries) that increasing taxes doesn’t impact employment. That’s hogwash. It’s driven large companies (e.g. Nissan) to Tennessee. It’s driven me to the Silver State, Nevada. Sure, I’m just one job but the money I earn goes to support others’ incomes. That will still be the case, but not in the Golden State, California.
With the movers coming tomorrow, and everything that’s been happening with the move and with what will happen over the next two weeks, it’s likely that posting will be minimal until mid to late December.
Russ,
Do you read the economist? They had an article last week discussing tax reform in California.
http://www.economist.com/node/21540308
Do you think these changes will help?
I don’t regular read Economist but I read that article. California needs to lower regulations and taxes; the plan that Governor Brown will be proposing is based on tax increases.
I did not know (until today) that California has had a net loss of taxpayers over the last few years. In a post on my leaving California, Paul Caron (TaxProfBlog) linked to statistics showing the loss of taxpayers. Until California legislators realizes that you can run a business almost anywhere to service Californians, and given that California cannot tax out-of-state businesses, fundamental reforms are required–a lessening of the tax and regulatory burden, not an increase.
[…] When Silver Is Better than Gold My tax bite is roughly 10% to California. For every dollar I make, ten cents goes to Sacramento. (Yes, I get a benefit from that in that state income tax is deductible on federal tax. However, because of the Alternative Minimum Tax even that benefit is capped.) For the past few years I’ve considered if I could move my business to a friendlier environment. Earlier this year, I decided to do so. […]
Unfortunately the governing system in California is screwed up. They need to get rid of these direct democracy propositions.
Californians have continued to vote for props with no way of funding them.
You won’t see tax rates fall until they can fix that situation.
Why not impose a withholding requirement on the California residents who purchase services from out-of-state service providers?
Force an out-of-state business to comply? Only the home state of the business or the federal government can regulate a non-California business. Perhaps require all payments going out of state to first go to the state for withholding. I’m sure that California residents would just love that idea.
The reality is that California can regulate intrastate commerce to its hearts content but cannot regulate interstate commerce.
Hey Russ, thanks for your amusing reflections. The Golden State is on a collision course that will not be alleviated until resolving the gerrymandered electoral districts situation, which stops competition for seats in the state legislature. The underfunded public retiree pensions also loom large on the horizon. Until California reduces expenditures at a faster pace than we lose citizens, the problem will continue to grow. The Silver State has always understood economic and personal freedom and this is relected in its tax policies. Good luck in your relocation. Just watch out for those “one-arm bandits.”
Hello Russ, I heard your interview on Bart Hanson’s 4/26/2011 and 2/1/2010 Deuce Plays podcasts. Thanks very much for taking time out to share your expertise. I have been browsing your blog and website but have been unable to find discussion of how taxes should enter into chop negotiations in live poker tournaments.
I was given a chop offer among four players which would have given me $6,800 and the other three players $5,000 (at the time I had about 420,000 chips out of 1,170,000) chips and I calculated my ICM to be roughly $7,200) so I turned it down. Ultimately we knocked out one more and played a bit longer, then chopped 3 ways for $6,700 each.
Afterwards, I was told that the casino is required to report tournament prize payments at $5000 or greater. This was only brought up later, but somebody suggested that normally what tournament players do is saddle one person with the tax burden, and pay that person extra to help pay the tax bill.
Assuming all players are US residents who file a tax return, does it make financial and/or tax sense to let one person take a disproportionate share of the winnings? If so, is that an acceptable practice? Any clarification and/or guidance you might provide concerning how live poker tournament winnings should be reported would be most appreciated.
It’s completely irrelevant. Everyone is responsible for his or her own taxes, and must pay tax on all of their income, whether or not they receive government paperwork or not. Let’s say you and I chop a tournament, and you win (winnings here are net $) $10,000 and I get $4800. You get a W-2G and I don’t. However, if I’m audited the IRS is now required to look at Google and similar sites to see if there are stories about my earning income. If they see something like, “Russ Fox cashed for $4800…” and I didn’t report that on my tax return, I’m going to have a problem.
What the others suggested to you is neither ethical nor proper.
Very clear — thanks Russ!
[…] my business–and the one whole employee in the Bronze Golden State (me)–left for Nevada because sometimes silver is better than gold. Mr. Vranich is seeing the trend starting up again while California has a budget surplus. Consider […]
[…] ago my business–and the one whole employee in the Bronze Golden State (me)–left for Nevada because sometimes silver is better than gold.” And their politicians are primed to make California taxes worse […]