California is DEAD -YOU WON'T BELIEVE THE NEW TAX

what's going on everybody welcome to ryan pineda show we talk all things money real estate and entrepreneurship and in today's episode we're going to be talking about two different taxes that california is trying to impose on their residence so it seems like everyone is trying to leave california i talk to normal people who say that the cost of living has gotten so extreme that they cannot afford to live there they're going to end up going to places like vegas or phoenix where it's cheaper or even the midwest where it's really cheap i also talk to wealthy people who live there and they are now trying to leave as well you look at elon musk and he was feuding with the county over his tesla workers not being able to work he ended up saying screw it i'm going to austin texas i'm gonna build my factory there you guys don't deserve me and it seems really dumb that california would allow that to happen but it's what they're doing and if you can believe it or not they're gonna be adding new taxes that are gonna make even more people leave so let's talk about the first tax as it stands right now they have a state income tax of 13.3 percent for reference places like las vegas where i live have no state income tax so if i make a million dollars here in las vegas i would just pay federal taxes on that million if i go make a million dollars in california i pay federal taxes plus thirteen point three percent that would come out to over a hundred and thirty thousand dollars extra i can make money the same exact way but i'm gonna pay california an extra hundred and thirty thousand dollars i don't know about you guys but i'm not down with that and i actually experienced this when i was flipping houses there i remember when i flipped my first house in california we were getting ready to close at the title company and then they had me fill out basically a profit and loss form they wanted to know how much i made on that property so they could take their 13.3 percent right there and i thought it was a mistake i was telling the title company i'm like no no no i don't owe them that i don't live in california we never do that in vegas and they said no any profit you make in california you got to pay that 13.3 and i was so shocked because in vegas and other places where i flipped anytime a property sells i've never been asked for a p l it's just they they don't care they just go about the title work and the deal is done so i was super confused that first flip i did over there because i didn't know why they needed a p l because even with federal tax technically i don't have to pay it until i want to now when i say that don't take this as tax advice i can choose when i want to pay the federal government their tax i'm going to get penalized for not paying it on time but typically that penalty is going to cost me far less than what i can actually use that money for as working capital the way i look at it is the government is giving me a loan at whatever that penalty interest rate is and if i remember correctly it was around five percent or something i can't borrow money at five percent with house flipping you know hard money lenders cost nine to ten percent so to me i'd rather have the capital and pay the government an extra five percent to go pay them later i don't pay them quarterly i don't pay them april 15th i wait till the very last second to pay them because i can use that money and make more money than the cost of being late well california does not let me do that they want their 13.3 right then and there so like i said the first time that ever happened i was stunned now i know to expect it every time i sell a house in california but the whole point is it is more expensive to do business and live in california and that's not even from the cost of living perspective just the tax perspective and paying that 13.3 percent sucks but that's what makes this tax they're now trying to implement even more mind-blowing they want to raise that 13.3 percent to 16.8 percent crazy now every million you make they want to take almost 170 000 if you're at that type of income level you're giving away over half of your income to the government i mean i'm pro usa i love my country but i do not think my country deserves half the money i make especially when we create so much other money for other people in the economy we're hiring people we're employing people we're shopping at all these stores paying taxes and all these different ways and then to go pay 50 on the profit it ain't right but that's what california wants to do i don't live that i don't care but i can tell you if they do get this approved you're going to see a lot of people moving that's going to be the straw that broke the camel's back for real and that's only one of the new tax proposals the second tax proposal is something i have never seen done if i'm wrong correct me in the comments because i'm not sure if this has ever been done or not but they are trying to tax the ultra wealthy based on their net worth if you have a net worth over 30 million dollars they want to tax you 0.4 percent now i don't have to worry about that because i ain't worth 30 million dollars hopefully one day i will have to worry about that but i won't be living in california so actually i'll never worry about it but they want to tax you 0.4 percent if your net worth is that high so let's just talk about the minimum here if your net worth is 30 million dollars and you get taxed 0.4 percent that's an extra 120 000 you're gonna have to pay them regardless of if you made money or not because they're taxing you based on net worth what about all the billionaires who are there if you are worth a billion dollars you're gonna have to pay them four million dollars just because and i don't know if this is something that they would do every single year but even if it was just a one-time deal that's not right even if they get this passed i'm not even sure how they could do it how many people actually have a net worth that you can determine there's so many assets that are held in so many different ways i have no idea how california would audit it you could have money outside of the country you could have hidden bank accounts if you wanted to get creative you could throw debt on all your real estate properties to make them seem like they have less equity there's a lot of ways to hide wealth so i'm not sure how they would even enforce this it's easy to go see how much cash you have how much you have in stocks as we talked about with real estate wealth they're going to take the equity have and count it towards your net worth but you can make your equity look smaller by taking out more debt how do you calculate what a business is worth if it's not a publicly traded company are they going to calculate it based on ebitda are they going to go off the tax returns i have no idea how they plan to calculate what a business is worth in one of my videos that you can find in the link below i talked about my net worth and my assets and as we went through it it's kind of difficult to see what someone's true net worth is we came out to a little over four million dollars for me and that was based on cash real estate stocks that type of stuff and i had many people in the comments say what do you think your business is worth because you're not factoring that into it and i said honestly i have no idea i've never tried to put my businesses up for sale i wouldn't because i love them but they definitely do have value they make money i don't do much with them they're pretty hands off so they have value i just don't know how much so i don't know how california would take those businesses and say they're worth this much and how would california take businesses that you own outside of california are they going to tax you on those businesses they're not based out of california but you own them so i don't know i really don't know how they're going to do that wealth tax it would be curious to see another interesting part about all this is that if you leave they are talking about still coming after you for these taxes which is even crazier how do you penalize somebody for california taxes when they don't even live in california anymore they want to leave because they don't agree with what you're doing yet you can still go after them for taxes in the future and they're talking about retroactively doing it meaning you didn't even have the choice if they decide to raise it for 2020 or even somehow 2019 2018 and then they say you owe all these taxes that would be crazy so i don't know how they plan to do this i just don't understand how you could raise taxes that high how you could tax on net worth how you can tax people retroactively how you could tax people who don't even live there anymore because of all this it kind of blows my mind i mean i'll tell you my mind was blown when i was 18 years old living there i was going to college at cal state northridge living in the san fernando valley which is not nearly as expensive as other parts of california and we had a two-bedroom apartment for two thousand dollars a month and we could not afford it so we had four people sleeping in a two-bedroom apartment we each had twin beds in each room living together as college kids and that was over 10 years ago i don't even want to know what those apartments are going for these days so as i said i don't know how people afford living there now with its current situation its current cost of living plus all these increases in taxes i'm gonna be very curious to see what people do in california both on the normal income level and then the wealthy income level i just don't see the point of staying there with all this stuff and you gotta believe that this is just the beginning this is not the end-all solution i think they're going to continue to raise taxes i think they're going to get even more creative if this doesn't work they're going to move on to something else because there's probably a tax deficit and they're going to have to figure out how to cover it so if you're tired of living in california you don't want to deal with this you could definitely just come live in vegas with me and then go visit california when you feel like it super simple trip and then you avoid all of these taxes your cost of living is less you just got to deal with the dry heat but anyways if you like this video do me a big favor go hit that like button if you haven't already go hit that subscribe button and make sure you follow me on all the socials i'm active on their daily and i'd love to hear in the comments below what you think of this tax i don't think many people are going to be affected by the wealth tax but i'd love to hear your perspective anyway do you think it's fair that they should have to do that as a normal earner do you think it's fair that you should pay 16.8 percent to california just because you live there i'd love to hear you guys perspective especially those who are living there right now what you think of it are you seeing people leave the state have you thought about leaving the state i'd love to hear the firsthand experience of what you guys are thinking so if you stayed with me until now i appreciate you for watching this video take care you

Channel: Ryan Pineda

Views: 699,084

Rating: 4.8797922 out of 5

Keywords: real estate, house flipper, cash flow, financial freedom, entrepreneur, future flipper, house flipping, rental properties, passive income, real estate investor, real estate investing, wholesaling real estate, ryan pineda, graham stephan, meet kevin, max maxwell, bigger pockets, grant cardone, California taxes, california wealth tax, california wealth tax proposal, california state income tax, income tax, finance tips, california real estate, millionaire tips

Id: qXqCpfq_2b8

Length: 9min 39sec (579 seconds)

Published: Wed Sep 02 2020