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Author: 4gonefool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 756838  
Subject: Re: retire early study Date: 2/12/2000 9:42 AM
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And some people wonder while it's called The People's Republic.

I believe there are reciprocal agreements between CA and some states to prevent touble taxation. CA generally wants the difference between what you pay to the state you're in and what you would have paid to CA if you hadn't moved, but double taxation still occurs due to some convoluted formulas that always tilt in their favor.

CA is mainly interested in nailing two groups responsible for the majority of capital flight. The biggest group by far is retirees who move to states like Nevada, Washington and Texas where a reciprocal agreement cannot exist because there is no state income tax. The next biggest group is the steady stream of oil company employees that move back and forth between Texas and CA as they climb the promotion ladder, build new facilities and perform scheduled maintenance during turnarounds.

Your best bet is to get below their radar screens. I never advocate cheating on taxes, because I firmly believe that your vote is the proper way to express displeasure with tax rates. When you vote with your feet however, you transfer tax liability to the state you move to.

Take IRAs for example. If you move to CA upon retirement from another state where you built up a large IRA and you begin distributions, CA will tax all distributions. If you reverse that scenario and move to a state with a lower tax rate or no state income tax, CA should have no claim to that money. I think the feds had to step in and explain the fairness of this to them a few years ago.

4goneFool
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