Thread by @sama

The tax system in California has been broken for some time, and in a world of increasing remote work, is going to become even more broken.

There is a market for different state income tax rates; you can live in a state with a top income tax rate of 13.3%, or 0%, or many rates in between. Historically, you’ve needed to live near your job, but now for many jobs you don’t.

Some people are choosing to keep their same job but move to a location with a much lower income tax rate. The thing that has worked for California for so long—many of the best jobs in the country requiring big taxpayers to live here—may not keep working.

This trend is probably unstoppable; you can take your job and go somewhere else, and be subject to their tax system. This is probably going to be bad for the state and lead to decreasing revenue; it could lead to a downward spiral.

What you can’t pick up and take with you is real estate. A tax on land has long been a good idea; now it’s a great idea. CA does have a lot of the most desirable land in the country, and many people who are tax residents of somewhere else will still want to own homes here.

We also have a home affordability crisis. This is due to many factors, but two of them are our relatively low property tax rates (Prop 13 is a major contributor) and the policies we have that make building difficult.

So, a simple suggestion for California: get away from the reliance on income tax and the associated problems when people can choose where to live.

Switch to 0% income tax and a high property tax. Drastically reduce all policies that make homebuilding so difficult and expensive.

(A notable problem with this is it makes it hard to tax super rich people “enough”. I’m not sure what the best way to fix that is; maybe the answer is to leave an income tax in place for extremely high income levels.)