Entries Tagged 'Why I Hate California' ↓

On Friday I performed an interview for my team at work. My job was to take the candidate to lunch and answer questions the candidate might have and attempt to assess his intelligence and “fit” for our team. This is one of those very rare interviews that actually turned out well and everyone who interviewed the guy liked him and we decided to hire him.

However, I feel like he may not join us because he is actually currently living in Austin, Texas. He said that he went to a nearby open house in Foster City and was shocked to find that a tiny townhouse less than half the size of his home in Texas is listed for $900,000. He used to live in Sacramento many years ago but the cost of living there is nowhere near the craziness of San Mateo. Then we chatted about the Bay Area in general and I said that I actually did some research on Texas and found that I could afford a 40% pay cut and still afford a better standard of living. He agreed with me, and I asked him if he would consider relocating and he said he would probably prefer telecommuting. However, after he finished his 8 hour grueling interview my team lead did mention that he would like all core members to be close to the headquarter and telecommuting from Texas is probably a deal breaker.

I imagine this is happening all over the Silicon Valley. There are a lot of great talent from other states that are interested in the companies here, but are totally put off by the cost of living and the cost of relocating. Additionally, I know dozens of people who are exiting this place due to the same reason. Even though I love the energy and dynamics in this place sometimes I wonder if it’s worth it. Yes, we do have fairly high incomes compared to the rest of the country, but with that we have extremely high taxes and a ridiculously high cost of living. When all the math is worked out, I think many of us who live in the Valley could have better lives elsewhere.

I thought that the job candidate is wise to investigate the cost of living before making a decision. I doubt that he is getting a 70 to 100% pay increase because Austin, Texas is also a very lively city with an abundance of jobs. On one hand, I do want him to join our team, but on the other hand I was honest with him and I want him to make the best decision possible for himself. I really don’t want him to join my company and then regret it and become grumpy!!

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This post is the beginning of a series of articles about my love-hate relationship with California, and especially the San Francisco Bay Area. I have lived in the Bay Area for more than ten years now, and most of the major events in my life are happening here and that is why I have a lot of strong opinions about this crazy place. So here it goes.

Reason number one — TAXES

The most obvious taxes associated with California are the state sales and state income tax. The sales tax in California is anywhere from 7% to 9% depending on the county you make the purchase in, and the individual income tax is tiered from 1.0% to 9.3%. Unprocessed foods are untaxed, but restaurant services are. So on average, just the state taxes cost somewhere between 10% to 17% for a Californian. Compared to states where there are no income or no sales tax, Californian’s purchasing power is lowered just by state mandated taxes.

The next big tax in California dealt by many homeowners is the property tax. California’s property tax is actually not very high. Proposition 13 limits the amount of property taxes Californians pay to only 1% of the assessed value of the property. Lower taxes should be a good thing, but in my mind it actually creates a lot of inequality. For example, if I buy the condo I am living in today, I would have to pay approximately $8000 a year in taxes, but my landlord, who bought this place in the 1980s, only pays $1325 on his taxes. This tax law in California greatly benefits corporations and landlords because as long as their corporation does not change name, they can still enjoy the benefits of the lower assessment.

Finally, what I consider a hidden tax is the federal income tax. You may say, wait a minute, don’t all Americans have to pay according to the same federal tax rules? Well, yes, but Californians receive less in federal funding than the federal taxes they pay. According to The Tax Foundation, on average, California receives 79 cents in federal funding for every dollar of federal tax the state contributes to the federal coffers. California is considered a huge “tax-donor” state. So by living in California, we’re paying for the construction of other states when the money could be used to improve infrastructure in California. The worst thing is, a lot people aren’t aware of this fact, and I’m not sure how they would feel if they found out that 21% of their money went 500 miles away to a school in New Mexico, the state that receives two dollars in funding for every dollar contributed.

I am sure there is another whole array of California taxes that I don’t know about, but they’re all making the cost of living here a little more unbearable. Additionally, it doesn’t seem like our tax dollars are well spent. So I end this with a haiku:

The Franchise Tax Board

Took my dollar and left me

with seven pesos

(as of this writing a dollar is worth about 11 Mexican pesos)

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