High Home Prices and High Tax Rates Go Together
The parts of the United States where home prices are highest – New York, Boston, Washington, D.C., San Diego, Los Angeles, the San Francisco Bay Area, and Hawaii – are also areas where residents pay the highest taxes.
New York City high-earning residents face a 6.85 percent top state income tax and a 3.65 percent top city tax. That’s before facing a 35 percent federal tax rate. The California state income tax is 9.3 percent, kicking in at $43,500. And for people who make more than $1 million a year, California adds another 1 percent.
As a result, some big-city millionaires are taking their money and moving. Outgoing California millionaires of recent years include Netscape's founder, Jim Clark, who moved to Florida, and eBay's Pierre Omidyar, who moved to Nevada.
Says Rich Karlgaard, publisher of Forbes magazine: “Markets decide house prices. People decide tax rates. I have a hunch we'll see a Blue State tax revolt soon.”
Sources: Forbes, Rich Karlgaard (08/13/2007)