Recently, I got a note from a local business executive telling me he was retiring and moving out of California. He allowed me to use excerpts from his note so long as I didn’t identify him or his company. (Sorry, but I promised.) He wrote that, on the one hand, California can be a very good place for young people to build their career. But on the other hand? “I have concluded that it is far too risky to retire here. I have done well, but I do not have the kind of wealth that allows me to be oblivious to the tax load.” “As things stand currently, I would give about 20 percent off the top of my retirement income to the state of California in a combination of state income taxes, property taxes and various other taxes and fees. But the larger danger is that as the state gets more desperate to fund its pension problems, eventually the continuous attacks on Prop 13 will succeed – either through legislative action or a judicial mandate. I have substantial fear that at age 80 or so I could be forced out of my home and find myself in severe circumstances.” Proposition 13, as you probably well know, tethers property tax increases, and it was approved 40 years ago partly because of stories about how some retirees were forced to sell their longtime homes to pay their astonishingly high property tax bill. Ironic that decades later, the mere fear of Prop 13’s demise is scaring folks away. I know he’s not alone in deciding to retire outside of California. I can’t think of many people I’ve met who count on spending their golden years in the Golden State. Probably because I don’t hang out with all that many centimillionaires. One retired couple I know wants to keep their home here, but they plan to buy a second home in Arizona, where the tax burden is much lower, and live there six months and one day each year. They joked that the new home would pay for itself in saved taxes. At least, I took it as a joke. It reminded me of an article I read a few years ago that shocked me. So I looked it up: in May 2015, the Sacramento Bee calculated that 15 percent of pensioners in the California Public Employees Retirement System had out-of-state addresses. It was shocking as I thought that figure would be much higher. “It’s obvious that California’s taxes and the cost of living drive some people out of the state,” Mark Beach, AARP’s Sacramento-based communications director, was quoted as saying in that article. “I’m surprised the number of them leaving isn’t higher.” Charles Crumpley is editor and publisher of the Business Journal. He can be reached at [email protected].
