No surprise for my readers, but the Jerry Brown La-La Land budget revenue projections come true only in Disney's Fantasyland -- if there! The Legislative Analyst's Office says Brown is billions and billions of dollars off -- guess which way.
Below is the "hot off the press" article, but consider this comment I added first:
The eagerly awaited Facebook California capital gains tax windfall is largely illusionary. We are talking about folks who find themselves with a ONE-TIME capital gain windfall of many millions. If they get ANY tax advice at all, they will consider relocating outside the state to make the sale.
Indeed, they only have to live outside CA for over HALF a calendar year to qualify (well, there are other hoops like registration, etc. -- but the big one is moving).
If a Facebook computer programmer (or graffiti painter) takes a one-time $10 million capital gain in California, he/she will pay about $1,000,000 extra in state income tax. If Brown's retroactive tax increase passes, he would pay about $1.2 million. If the union tax increase passes, he would pay over $1.5 million in tax.
If such a recipient moves to income tax-free Nevada for only six months, he'll save anyplace from $165,000 to $200,000 for EACH month residing there. If it's a $100 million capital gain (and some will be), add another zero -- $1,650,000 to $2,000,000 a MONTH. That buys a LOT of buffets!
Shucks, at Nevada's real estate prices, just one month's tax savings could buy a modest Nevada subdivision!
Other tax avoidance possibilities include delaying the sale of most of the shares, setting up a charitable remainder trust, or gifting some of the shares outright to charity. Indeed, as I see it, any California Facebook multimillionaire who DOES pay the state's full, onerous capital gains tax DESERVES to lose their money -- for them, it's a tax on stupidity.
The Golden State's best hope is that these lucky shareholders avoid the capital gain and later return to high-tax California to live. But many likely will find that income tax-free Incline Village, Las Vegas, Seattle, Spokane, Orlando, Ft. Lauderdale, Laramie (WY), Dallas, Ft. Worth, or Sioux Falls (SD) are pleasant places to live -- as these state expatriots grow to like the lack of a state confiscatory income tax.
Here's the article:
Gov. Jerry Brown is counting on $6.5 billion too much through June 2013 even with a Facebook stock sale on the horizon, according to a new review by the state's fiscal analyst.
The nonpartisan Legislative Analyst's Office has taken a more pessimistic view of capital gains inCalifornia over the next 16 months, though it acknowledges in its new report that predicting those totals is "notoriously difficult." California's heavy reliance on volatile capital gains income has been a huge reason why the state has found it so difficult to budget in recent years.
The analyst's latest revenue forecast is not that different from its November projection, which translated into Brown being too optimistic by almost the same amount as today's report. Based on that projection, the analyst pegged California's deficit at nearly $13 billion at the time. Brown, using a more optimistic forecast, says the deficit is only $9.2 billion.
To see the full article, go to the link: