In A High-Tax State Like California, A Good Tax Attorney Is Your Best Friend
California is the Golden State. Great climate and natural beauty. But it’s not the mecca it once was, in large part because of the high taxes and cost of living.
If you are establishing business operations or residence in California, quality tax counsel can be invaluable. The experienced tax attorneys of Goldburd McCone LLP serve individuals and businesses statewide from our Los Angeles office location.
Leading The Nation … In Personal Income Tax
California ranks among the highest in the country for income tax burden. There are nine tax brackets with graduated tax rates. The lowest bracket is taxed at a flat 1% and the highest bracket has a top marginal rate of 13.3%. A middle class individual with taxable income of $90,000 would pay an effective rate around 6%. A high earner with taxable income of $900,000 would pay an effective rate around 10.5%.
Sales Taxes Are Also Sky High
California has one of the highest sales and use tax burdens in the country. The state sales tax is 7.25%, and supplemental local sales taxes boost that as high as 10.5% in some jurisdictions. The combined sales tax is 8.75% in Sacramento and 9.5% in Los Angeles. California exempts groceries, prescription medicine and utilities.
Property Taxes: The One Bright Spot
California’s effective property tax rate (0.79% after exemptions) is well below the national average (1.19%). For example, taxes on a $500,000 home in Los Angeles County would be about $3,600 vs. the U.S. average of $5,350. The caveat is that home prices are massively higher in California – that $500,000 buys far less house than it would elsewhere.
Homebuyers pay a one-time supplemental tax based on the difference between the most recent assessed value and the purchase price (or get a refund if they paid less than the assessor’s valuation).
Not Friendly To Small Businesses
The Tax Foundation ranks California 49th in the country for business tax climate. The high individual taxes are coupled with an 8.84% corporate income tax far above the national average. Still worse, California levies both personal and corporate taxes on pass-through entities such as limited liability companies (LLC) or S corporations, meaning small-business owners are essentially taxed double. At 6.65%, California’s alternative minimum tax provides little opportunity to reduce the corporate tax rate through write-offs.
Call Us For Comprehensive Tax Law Consulting
Despite the oppressive taxes, there are thriving businesses and Californians who earn a good living. Goldburd McCone LLP can help you anticipate and mitigate taxation through various strategies to protect the fruits of your labors.
In fact, we recently opened a California office because of the great need for savvy tax planning and effective representation in audits and tax controversies before the IRS, the California Department of Tax and Fee Administration, or the Franchise Tax Board. We have experience across the spectrum: audits of individual income tax returns, audits of self-employed persons relating to business deductions and personal expenses, corporate income tax and sales tax audits, e-commerce audits, and residency audits of people who have moved from California to a low-tax state. We defend individuals, businesses and nonprofits at all stages of this time-consuming and stressful process, from preparing for an audit to appealing an adverse finding and assessment of tax and penalties.
To discuss any tax law matter, arrange a complimentary initial consultation by calling our L.A. office at 310-695-6162 or contact us online.