It’s official: the 2028 Summer Olympics will be held in Los Angeles, California of the United States of America. Los Angeles has the second highest population of any city in the United States, but that silver medal status may soon turn into bronze.
In 2023, Los Angeles County had the highest number of residents leaving compared to any other county in the United States.
Los Angeles County lost 56,420 residents in 2023, the most of any county across the U.S., census data show.
— Los Angeles Times, California is still losing Californians. It’s no mystery why
But this sentiment isn’t just limited to L.A. People across California have shifted. The drastic number of people exiting California has been referred to as a mass exodus.
The reality is that living in California is more expensive than most other parts of the country. It’s known as the “sunshine tax”, which isn’t an actual tax, but rather a higher cost of living for a presumably higher standard of living. This is nothing new, but as the economy becomes tougher and significant costs of living, like housing, become more competitive and expensive for buyers, many are finding the sunshine tax to be more trouble than it is worth.
The actual taxes are what many consider to be high. Even some of the wealthiest Californians lament at the 13.3% rate on personal income that exceeds $1 million, the highest marginal rate in the U.S. There is also a Wealth Tax, started in 2024: 1.5% on a net worth exceeding $1 billion.
To make matters worse, California has a Franchise Tax Board (FTB) that carefully scrutinizes the status of residents and non-residents and pursues those it believes are still classified as taxable.
There is also the California Exit Tax, which would not affect those who are not already subject to the Wealth Tax. The Wealth Tax and Exit Tax could mean that someone who packed up their life and work and moved out of state in hopes of reducing their tax burdens and enjoying life with a higher net income could still be subject to the California Wealth Tax, if they are deemed a “Wealth Tax Resident” even years after their exit. The possibility of a situation like this has prompted high net worth households in areas like La Jolla, Del Mar, and Carmel Valley to gather expert input and find “IRS lawyers San Diego”, getting down the brass tacks of what they can do to move out of California and legally avoid paying tax to a state which they no longer have connection to.
It is unclear as to how long California can audit exited residents and how its tax laws will affect those it is imposed upon. The Wealth and Exit Taxes have drawn considerable criticism about its constitutionality, with some arguing that it could discriminate against commerce between states.
Moving your home and business, or both, is a big decision that many do not come to lightly, especially when leaving a state like California. Speak to a wealth tax attorney at Hone Maxwell LLP today.
Hone Maxwell LLP
https://honemaxwell.com/
+16199804476
