# Moving to Los Angeles



## Angelica Davids (Aug 14, 2014)

Hi all I'm moving to Los Angeles in January next year. Does anyone know what income tax rates are there?


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## Bevdeforges (Nov 16, 2007)

Depends on so many variables. For info on Federal income tax, check the IRS website. For state income taxes try the Franchise Board site https://www.ftb.ca.gov/index.shtml?disabled=true

Or you can look at one of several sites that summarizes state and federal tax rates like this one: California Income Tax Brackets 2014 However, don't apply the tax rates to your gross income - there are a bunch of deductions, exemptions and adjustments to take into account before you arrive at "taxable" income.
Cheers,
Bev


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## Angelica Davids (Aug 14, 2014)

Thank you so much for your response. Any idea what deduction I will get? I will be living alone not married no dependents


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## Bevdeforges (Nov 16, 2007)

Your filing status will be single - so you get one "personal exemption" and after that you have the choice of taking the standard deduction or itemizing your deductions (usually not worthwhile until you have bought a house and can deduct your interest paid on the mortgage loan). 
Cheers,
Bev


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## Angelica Davids (Aug 14, 2014)

Thank you. So I will pay Federal tax & state tax?


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## Crawford (Jan 23, 2011)

Angelica Davids said:


> Thank you. So I will pay Federal tax & state tax?


Yes... unless there is something unusual about your employment.

If you are moving for a job why don't you ask your prospective employer?

..... and don't forget to take into account health insurance costs.


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## Meritorious-MasoMenos (Apr 17, 2014)

Angelica Davids said:


> Thank you. So I will pay Federal tax & state tax?


Angelica, you should hope only federal and state. Many large U.S. cities also extract income taxes. I don't know about LA. I know about New York City where the city income tax is ruinous. You can probably find about this via google if other posters can't answer that, but you should find out. You didn't think all that sunshine was free, did you?


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## BBCWatcher (Dec 28, 2012)

Los Angeles does not have a local income tax.

For the record, New York City's top marginal income tax rate for 2014 is 8.82%, and that top bracket only kicks in for unmarried individuals earning a bit over $1,000,000 (married couples over $20,000,000) in taxable income. (Not all income is necessarily taxed.) "Ruinous" is not the first word that comes to mind to describe an 8.82% top marginal tax rate above $1M -- let's not engage in hyperbole.


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## moncherie (Aug 18, 2014)

I think it really depends on your income and how you structure your salary.
Are you Salaried Employee or Free Lancer?


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## socksie88 (Oct 1, 2014)

https://www.ftb.ca.gov/forms/2014_California_Tax_Rates_and_Exemptions.shtml


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## Meritorious-MasoMenos (Apr 17, 2014)

BBCWatcher said:


> Los Angeles does not have a local income tax.
> 
> For the record, New York City's top marginal income tax rate for 2014 is 8.82%, and that top bracket only kicks in for unmarried individuals earning a bit over $1,000,000 (married couples over $20,000,000) in taxable income. (Not all income is necessarily taxed.) "Ruinous" is not the first word that comes to mind to describe an 8.82% top marginal tax rate above $1M -- let's not engage in hyperbole.


my goodness, BBC, I was only middle class when I lived in Manhattan, but I certainly paid the NYC income tax. Maybe 8 % off a million a year is not ruinous, but 3 or 4% off salaries under $100,000, ON TOP OF PAYING STATE AND FEDERAL AND SOCIAL SECURITY AND MEDICARE (excuse me for shouting) is ruinous.

There should in fact be no income tax. Yes, it's constitutional, but the only real fair tax, after making exceptions for poor people, is a tax on goods and services. That would be a real move toward freedom.


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## BBCWatcher (Dec 28, 2012)

Meritorious-MasoMenos said:


> There should in fact be no income tax. Yes, it's constitutional, but the only real fair tax, after making exceptions for poor people, is a tax on goods and services. That would be a real move toward freedom.


That prescription would also be, objectively, a huge windfall for high income individuals and those who inherit significant amounts of wealth (substantially above $5 million total estate value). It would be terrible for everyone else.

I'm assuming you'd eliminate payroll taxes as well since those are also (earned) income taxes. And corporate income taxes since those are, obviously, income taxes.

If you eliminate the personal income tax (including estate and gift taxes), payroll taxes, and corporate income taxes at only the U.S. federal level -- ignoring local and state income taxes -- then out of the ~$2.86 trillion in federal tax receipts you'd wipe out "only" $2.79 trillion, or just shy of 98% of federal tax receipts. To replace that lost revenue -- never mind balance the budget -- well, let's take a look. U.S. GDP is about $16.8 trillion. Except a good chunk of that is local, state, and federal government -- call it 35%, or about $5.9 trillion. So that leaves $10.9 trillion to work with. If you could _somehow_ tax every dollar of private sector GDP -- no exemptions, not even for medical expenses, not even for babies' shoes -- then you'd need a 26% tax. But that wouldn't actually work because a 26% tax levied that way would dramatically reduce consumption by killing lots of consumer demand, plus you've got tax evasion and other problems in reaching full coverage on the (reduced) $10.9 trillion. And some of that $10.9 trillion is already subject to federal excise taxes, e.g. motor fuels. Put all that together and you're well north of a 30% rate at least.

We're also ignoring the spending increases required on safety net programs to deal with the calamity that a 30+% universal goods and services tax would cause. Yes, you do have higher incomes (no income tax), but the elasticities are all wrong here. Consumer demand is about 2/3rds of the economy, and you kill much of that with a 30+% tax. The higher incomes wouldn't come close to making up for that demand loss -- and the shrinkage in the overall economy pulls back much of that income anyway.

Do you think you'd get much political support for trading the current federal system of income taxes (excluding federal excise taxes) for a 30+% sales tax on every dollar of U.S. private sector GDP?

I should note that this very experiment has been tried at the state level -- reduce income taxes and raise sales taxes (not enough to compensate) -- most recently in Kansas. It's been an unmitigated economic and political disaster, and the incumbent politicians who did this look very likely to lose their jobs next month.

By the way, local and state income tax is partially federally deductible for those who itemize their deductions. That deductibility drops both the marginal and net effective rates down -- and people paying non-trivial amounts of local/state income tax itemize. Let's look at an example: a married couple living in New York City with a combined earned income of $26 million. Looking at the final $1 million (from $25 to $26 million), that'd be taxed at the top federal marginal rate of 39.6%, i.e. $396,000 in federal income tax on that $1 million. (I'm ignoring the Medicare surtax for this exercise -- this is just an example.) Would that couple pay another $88,200 in New York income tax? Well yes, but then they get back $34,927 as a federal deduction. So their total income tax (local, state, and federal) on that particular $1 million (their final million for the year) is $449,273, or 44.93% if my math is right. Or in other words their New York top marginal tax rate was reduced from 8.82% to 5.33% as a direct consequence of federal deductibility.

All the other local/state marginal income tax rates drop through federal itemization, too. This example is just showing you the impact on the top marginal rate.


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