Many California residents, uninterested in the state’s tax and regulatory atmosphere, have taken some “darkish, desert freeway” eastbound to friendlier states, to echo the lyrics from the 1977 Eagles music, “Resort California.”
The music’s chorus is especially apt, too: “You may take a look at any time you want, however you’ll be able to by no means depart.”
To California’s Franchise Tax Board, you’ll be able to depart — but it surely would possibly nonetheless think about you a resident for tax functions.
A latest report from the San Francisco Chronicle discovered that, “Individuals leaving California … could discover that some or all of their revenue may nonetheless be taxable in California.”
Different states take related approaches, however California revenuers are notably aggressive at chasing down expats.
As Pender added, California didn’t impose an exit tax, however as an alternative imposes one thing related.
It taxes athletes primarily based on the variety of video games performed in California. It embraces a broad definition of the phrase “domiciled,” which means that when you take up residence elsewhere it nonetheless would possibly think about you a Californian when you preserve shut connections throughout the state.
California will nonetheless tax you for, because the article famous, rental revenue or a enterprise with gross sales within the state, revenue from California-based retirement plans, freelance revenue from California shoppers and different revenue sources.
The company typically audits “high-income individuals who have not too long ago established residency in one other state.”
In a single infamous case, California spent 26 years attempting to gather hundreds of thousands of {dollars} “from a rich pc chip inventor … after state tax collectors accused him of fabricating a transfer to Nevada simply as he began to money in on a profitable patent he obtained in 1990,” based on the Las Vegas Solar.
The inventor largely gained his case in 2017, but it surely exhibits simply how zealous California might be at chasing taxes.
As an alternative of focusing on fleeing Californians, the Legislature and governor ought to create a tax construction and local weather that encourages folks to take a position, work, construct companies and create income right here.
“Resort California” was an allegory of greed — one thing that’s particularly becoming given the infinite greed of the state’s tax businesses.
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