Today the WALL ST JOURNAL ran another of my letter to the editor submissions. The last time I was published, I bragged that I was four-for-four on WSJ submissions making it into print. Sadly, this latest success follows a rejected submission, so of late I'm now five for six.
Here is my well-edited letter as published. My submission was too long, of course.
WALL ST JOURNAL
Pushing Those Golden Geese Away
The California Facebook capital gains tax windfall is largely illusionary ("Facebook to the Non-Rescue," Review & Outlook, March 8). If the recipients get any tax advice at all, they will consider relocating outside the state to make the sale. Indeed, they only have to live outside California for over half a calendar year to establish residency somewhere else.
If a shareholder takes such a one-time $10 million capital gain in California, he will pay about $1 million extra in state income tax. If Gov. Jerry Brown's retroactive tax increase passes in November, he would pay about $1.2 million. If the union-backed tax increase passes, he would pay about $1.5 million in tax. If such a recipient moves to income tax-free Nevada for only six months, he'll save anywhere from $165,000 to $200,000 for each month residing there just on capital gains, not counting the California income tax he'd save.
Other tax avoidance possibilities include charitable remainder trusts and donations. California'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 states are pleasant places to live after all—especially when one is rich.