Q&A – Comparing California’s Taxation to Florida’s
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.
Today’s Entry: Good Morning Brian, I trust you! You are the one person I believe in and am so thankful for your daily broadcast. It is being reported that Floridians pay more taxes than California citizens. Is this true? Please help me to understand with a clearer picture of this report.
Bottom Line: I truly appreciate the kind words and am thankful for the opportunity to do what I do because of you and others like you who listen to me. The short answer is that no this isn’t true. In fact, statistically, it could hardly be further from the truth. In a similar but different Q&A last week, when I was asked to address the narrative about whether Florida’s lack of a state income tax is balanced out in other ways, I highlighted this fact based on data from the Tax Foundation: The average resident of California pays 273% higher taxes to live there than the average Floridian does to live here. As I illustrated in that story, Florida’s total tax burden for its residents is the second lowest of any state in the country, while California’s is the highest in the nation. Yet, the absurdly false narrative, that California’s taxes are lower than Florida’s continues to be advanced.
The reason the false narrative has somewhat regularly been advanced is because California Governor Gavin Newsom keeps the lie alive. In December Newsom, in his ongoing rivalry with Governor DeSantis said this: Substantively, Florida taxes low-wage workers… more than we tax millionaires and billionaires. Now, the choice of words is especially interesting. Why did Newsom use the adverb substantively to preface his statement? If it’s actually true that Florida taxes low-wage workers (or any workers for that matter), why not just make the declarative statement of fact? The reason, of course, is because it isn’t true. The choice of the term “substantively” is a way for him to make the implication that Californian’s pay less than Floridians in taxes, without having to be directly accountable to the facts.
New life has recently been breathed into the false narrative by the Institue for Taxation and Economic Policy who created a study aimed at attempting to support the falsehood. Last week the ITEP produced a study entitled: “Is California Really a High-Tax State?” Their first “key finding” was stated as this:
- For families of modest means, California is not a high-tax state. California taxes are close to the national average for families in the bottom 80 percent of the income scale. For the bottom 40 percent of families, California taxes are lower than states like Florida and Texas.
When you dig further down into their study you’ll also find this:
- Texans earning less than $21,700 and Floridians earning less than $19,600 pay a larger share of their income in state and local taxes than the 1 percent of Californians with incomes over $862,100 per year.
Implicit in that statement is where the sleight of hand comes into play. Rather than discussing the total tax burden paid by taxpayers, the IETP chooses to talk about a somewhat theoretical “percentage share” of income that’s going towards paying for taxes. Using that methodology (which is based on numerous assumptions and subjective comparisons of taxes levied by states at the consumer and business level), states without income taxes show more poorly. That’s due to states like California, with progressive income tax structures (that are similar to the federal income structure), imposing a higher percentage tax rate on upper income earners. The tax rates Floridians pay are all fixed regardless of income given that there’s no income tax.
This is a trick and a tactic that’s been advanced many times over the years by leftist interest groups which desire to impose income taxes in states without income taxes like Florida. The IETP, happens to be one of the leading leftist interest groups that does this. While many stories have been dutifully produced talking about this new study, what hasn’t been provided is the context or the motivation which is this. The ITEP is categorized by the Pew Research Center, as a “liberal think tank”. Their funding, what they “study”, and how they present the material is all directed to achieve political advocacy on the left. And their credibility, based on their selective methodology, has historically been evidenced as false. For example, they were one of the leading organizations to advance the narrative that the Trump tax cuts would only benefit the rich – even going so far as to post a Salon article to that effect on their website. As was evidenced through actual tax return data – following the passage of the Trump tax policy, Americans at every income bracket paid lower federal income taxes, except for the highest income earners.
Still, if the information had been presented in an intellectually honest way that wouldn’t be an issue. Instead, it isn’t. What the IETP, Gavin Newsom, nor any of the stories I’ve seen (wittingly or unwittingly) advancing this narrative have presented is what Californians are actually paying in taxes at all income levels. The answer is higher taxes. Substantially higher taxes.
California imposes all the taxes Florida imposes at the income/consumer level (commonly at higher rates than Florida imposes) plus the state income tax on top of those taxes. The net effect is what I cited at the open and illustrated last week.
- The average resident of California pays 273% higher taxes to live there than the average Floridian does to live here.
Or, another other way of looking at it, the average Floridian only pays 37% of the total state and local tax burden that the average Californian pays. Californians pay an average of $4,770 per year more in total state and local taxes than Floridians annually. That’s effectively a month’s worth of income for the average household. Given that reality, that the average family in California must fork over the equivalent of a month’s worth of additional income to live in that state compared with families in Florida, it’s absurd on its face for any entity to attempt spin narratives suggesting California’s taxes are lower than Florida’s.
There is no empirical evidence Californians pay less in total state and local tax than Floridians at any income level. As always there are two sides to stories and one side to facts.