We all know that it’s far less expensive to live in Texas than in California. But just how much less expensive?
To really get to the nitty-gritty, you have to break it down by cities, and Jeff Powell, managing partner and chief investment officer San Rafael, California-based Polaris Wealth Advisory Group, did just that in preparation for an interview with the Dallas Business Journal.
His conclusion: It is precisely 62 percent less expensive to live in Dallas than it is to live in San Francisco.
For high-earners, the cost difference is magnified by a state income tax rate in California of 12.3 percent for filers earning $500,000 and above, and could be further amplified by a proposed state tax on residents’ net worth above $30 million, Powell said.
To arrive at his conclusions, self-described “numbers geek” Powell built a spreadsheet that breaks down that impact state-by-state for a resident with an annual income of $1 million, a 4,000-square-foot home, a $5 million overall gain in the value of their property or business, and $150,000 in annual spending. Powell then compared the following factors: state income tax, sales tax, property tax, home price, state capital gains tax and the impact of selling a business.
The bottom line is, California’s comparatively high taxes — and a host of other factors — are spurring more wealthy residents to move out of the Golden State, or at least to consider doing so, and many who leave head to Texas, Powell said.
“You've got people that are more motivated now to leave the state than ever,” he said.
Powell talks about his findings and other considerations in the interview that follows:
To read the rest of this interview, see this story.