NEW YORK (ETF Expert) -- How does the state of California intend to combat its exorbitant debts? Left-leaning leaders have proposed higher income taxes on the "rich" as well as increasing sales taxes.
Unfortunately, California already sits near the top of the country's taxation ladder. At present, top marginal bracket payers are shelling out nearly 10% -- close to three times the national average.
State corporate tax rates are approximately twice the national average at 8.84%. In fact, wherever one looks -- property, gasoline, sales -- the tax rates may be higher than anywhere else in the nation.
So why would anyone with money stick around California to experience additional fleecing? It doesn't appear that they are.Arthur Laffer, widely recognized for his work on the Laffer Curve, recently pointed out that California witnessed a net loss of nearly 900,000 tax filers between 1992 and 2008. Even scarier, it isn't known how many productive tax filers left the state during the economic meltdown and tepid recovery period circa 2008-2011. What is known is that more working adults have left California than have entered the cash-strapped state, reducing the size of the tax base. Additionally, those who exited are/were 14% wealthier (on average) than those who came in. Simply put, the California government is not able to tax as many people let alone tax as many wealthy people. The better earners and entrepreneurs -- many of whom indeed have a choice with respect to residency -- are pursuing tax-friendlier environs. You don't have to take my word for it. The statistics already speak for themselves. Many are planning to relocate to Nevada, Arizona or Utah; others already have; I am mapping out a long-term strategy for limiting my exposure to California taxation. Granted, some "rich" people will not abandon their roots. Those folks may figure that their problems can be solved through investing in California municipal bond funds. Indeed, California munis have had a remarkable run as of late. Following are three exchange-traded funds that track California municipal bonds and their percentage gains over the past year.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV