As I prepare to move to California and open our SoCal office (LA), I reflect on something Phil Mickelson, Hank Moody, Shaq, Tony Robbins, and the Ex-Governator have in common…they all hated on California for its state taxes. And with an upper bracket of 13.3%, well, it’s easy to understand the frustration. Think about it, on $1M that’s $133,000 in just state taxes immediately working for the taxman, not for you. All the sun, sand, and surf can’t help ease that tax-punch in the face.
Again, that’s just state tax. Don’t forget federal taxes to consider:
1. Marginal Rate above $464,850 is 39.6% (Married, Filing Jointly). For those selling real estate or a business (Long Term Capital Gains) is 20% for most of you.
2. Payroll Taxes.
3. Capped Itemized Deductions.
4. 3.8% Surtax on Net Investment Income (Obamacare).
5. .9% Additional Medicare Tax (Obamacare).
With that news can Californian’s still heed Glenn Frey’s advice and “Take It Easy”? Yes…because there are folks that can focus on the amazing lifestyle California provides and less on tax losses.
Who are these lucky people?
The tax deferral and finance platforms available to you have saved and made our clients millions. Many people relate the products to a 401k plan without any of the restrictions. Bottom-line: the more you put your money to work for you vs losing it immediately to our favorite Uncle, the more money you have. And the higher taxes you have to pay, the more it makes sense to have a sound deferral/investment/finance strategy in place. California carries the highest state tax in the USA, so its residents have the most to lose if they do nothing.
Let’s catch up over some sort of local dish that contains kale, avocado, and chia seeds while I’m in town and determine how much a tax deferral and finance strategy can help you.
Keep your surfs up, not your tax bill.