Sell CA real estate, buy in Nevada and Arizona.
Today’s Wall Street Journal’s editorial page listed some good reasons why our state’s economy, and thus real estate, is about to get clobbered if our looney legislature gets its way with upcoming tax hikes.
Our income tax top rate may get hiked to 12%, higher than any other state, and about twice the national average. Nevada has NO income tax. Look for more Bay Area “executive commuters” and entrepreneurs to live in Tahoe & Reno. Likewise Las Vegas for L.A. high earners.
They also plan to raise our already above average corporate tax.
Especially damaging would be their plan to end annual adjustments in the tax brackets for inflation, which would give every taxpayer an automatic tax increase each year. With inflation accelerating, this will become huge.
Companies are already saying to Schwartzenegger “Hasta la vista, Baby”. AAA is moving all its call centers to other states (900 jobs), and Prius will not put its planned factory in the Bay area after all, citing high tax and regulatory costs in CA.
The state has had a net outflow of 1.3 million people between 1996 and 2005. Of course, our population has grown due to immigration, legal and illegal, plus a high birth rate. But the higher earners, employers, and better educated ones are the ones fleeing this high tax state. The lower earning people and those enjoying our generous safety net are accounting for a bigger share of our population.

Our income tax is so steeply progressive that it is little wonder so many voters don’t mind our high taxes. “Those with incomes of more than $100,000 pay 83% of the State’s income taxes…”
The anti-tax CA Republicans are a diminishing breed, and Governor Schwartzenegger long ago turned into a girly-man liberal. If the Democrats win just a few more seats, which looks likely, the Republicans will get rolled as vetos will be overridden.
High and rising taxes in CA will be an anchor on the long-term values of our real estate.