You Could Live in Cheyenne, Wyoming or SF, CA

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SF Gate has a story on a report listing the top 10 cities with the most job opportunities and San Francisco ranked 10th with Cheyenne at the top of the list. READ MORE.

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  1. John

    Wyoming is increasingly appearing on “best state” lists for various purposes. Key to that is what is considered ten tax advantages that makes WY the most tax-friendly state in the US.

      • John

        For now, it’s just ski trips. At some point, it may be worth my time to establish tax residency there.

        But I’m going to be in SF for a good old time yet, so expect to continue to lose debates here.

        • Always nice when folks come right out out and say they’re planning on establishing a bogus residency for tax purposes. Really shows their commitment to both communities!

          • John

            Where was “bogus” mentioned? Each State defines it’s own residency rules and it’s not complicated to stay within them.

          • The dodge that we’re talking about involves someone living in California, thereby taking advantage of California’s publicly funded services (I.E., roads, police, fire, water)– but maintaining a for-tax-purposes fiction that they “really” live in Wyoming, so they don’t have to help pay for Californian public services, That’s using things without paying for them. Is that really for you?

            (Phrased that way because you apparently haven’t done it yet, and phrased the future possibility as “may”. Since I myself have been known to mutter darkly about certain things without ever really formulating an intent to do them…)

          • John

            Stephan, I am not an expert on tax arbitrage, but my understanding is that each State balances their tax approach to residency rules with their desire to attract inbound investment and spending dollars.

            Note also that property taxes are typically due in full regardless of whether you spend any time in that home or not.

            I believe that most States use the same 183 day rule that the Feds use. So in theory you could arrange your affairs so that you are not resident in any State for a calendar year. But only by spending a great deal of money maintaining different homes and moving around a lot, so I suspect it’s not worthwhile unless you are super rich, and then you’d probably offshore yourself anyway.

            My interest would be in establishing residency in WY while maintaining as much residency in CA consistent with not being subject to CA income and estate taxes. To the best of my knowledge, that is perfectly legal. And something that we are all free to do if we choose.

          • nutrisystem

            Kind of like Google… they claim that their American profits occur in Ireland in order to avoid paying US taxes.

            I guess if your lawyers grease enough politicians, you can get away with anything.

          • Okay; let’s posit it can be made to work with 182 days in California a year, and 183 in Wyoming. (Plus whatever you’re supposed to do for leap years.) You wouldn’t have a moral problem with spending a bit under half the year in California, making use of the publicly-funded California services, while not paying anything for them? Noting too that police and fire protection’s extended to your 182-day California not-quite-a-residence whether you’re under the roof or not– so for some important services, you’re using them 365 days a year regardless.

            Taking 49% of a loaf of bread without paying for it is a lesser theft than taking an entire loaf without paying for it, certainly. And the law doesn’t require us to be moral– only to follow the laws. But is “It’s legal” the end of the question for you?

            (Lest you think I just ignored your point about property taxes: since per Prop 13 they’re assessed against the purchase price of property rather than an updated assessed price, they’re not California’s main way to fund things. Which is one reason California has to fund so many things through so high an income tax in the first place… Similarly, if you have a lot of rental-property assets in California, California is shelling out bucks for services that helps keep them as valuable as they are. Estate taxes, though, I know very little about– are they that different between California and Wyoming?)

          • John

            Re Estate taxes, I know only that CA has an estate tax and WY does not. I’m hopefully not old enough to worry about that yet, but I think these kinds of decisions are taken into account a lot by people who are retiring and would like to be taxed less on their retirement income.

            If you were officially non-resident in CA, you’d still pay property tax (as previously noted). You’d also pay CA on any CA-sourced income. And you’d pay sales tax in CA on purchases during that 182 days as well. So you’d be paying plenty of CA taxes, especially considering that CA tax rates are about the highest in the nation.

            Prop13 gets us into another whole topic, but note that despite Prop13, CA’s property tax receipts have increased by an annual rate of 7% since the prop was passed. That means property tax revenues double every ten years. The state really ought to be able to make do with that.

          • Well, now I’m confused. I though (part of) the goal was to avoid CA income tax– but if your income from CA property rental gets CA taxed anyway, what good would WY residency do you?

            I’d check on the estate tax thing; gotta do the estate planning eventually anyway, life is uncertain, better to have but not need, and all that. You might be pleasantly surprised; most of the pages Google pulls up in response to “California estate tax” say California doesn’t have one any more. It hasn’t really since 2005, but the most recent nail in the coffin was the 2012 American Taxpayer Relief Act. (But I am by no means certain; I Am Not An Estate Planner.) (There’s still a Federal estate tax on anything over ~$5 million, but that’s not likely to change with state residency. Besides, at that level, it’s time to look into trusts and pass-through charities and such.)

          • John

            Obviously anyone leaving CA for tax reasons would probably sell their CA properties and reinvest elsewhere, so that there is no CA-source income.

            Pensions earned in CA are not taxed when paid out unless you live in CA.

            Like I said, I can’t help you on the estate tax thing.

          • Yeah, but full-blown disinvestment brings us back to “We’ll miss you.”

            And just for the sake of completeness: what I meant by “I’d check on the estate tax thing” is “If I were you, I’d check on the estate tax thing.” If there is no California estate tax– and assuming you didn’t die before 2005 Jan 1, the California State Controller’s Office doesn’t require you to file a return for it– there’s no sense in your worrying about it. (Although to be honest, I’m curious as to who told you California had an estate tax but Wyoming didn’t. I’ve heard a lot of weird things being thrown around during the Obama administration, but I haven’t heard that one.)

          • John

            I can be in Jackson Hole and still post here. It’s the magic of the internet.

          • And they used to say that it was a ham and two people that was eternity.

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