People leaving the Bay Area are more affluent than new arrivals. Here’s why that matters.
Mark CalveyFeb 20, 2020, 4:17pm PST
High taxes and housing costs are cited as factors driving the affluent out of the Bay Area.
People leaving four of the five counties of the inner Bay Area had higher average incomes than those moving into the region, according to an analysis of the IRS’s latest migration data by Civic Analytics, an economic research and consulting firm.
The IRS looked at individual tax returns where taxpayers’ tax returns filed in 2018 reflected a different address from their returns filed in 2017. The latest IRS migration data does not reflect the full impact of the new federal tax law that went into effect in 2018, which made Bay Area living even more expensive by capping the federal deduction for state and local taxes paid at $10,000. One third of San Francisco’s residential property owners pay annual property taxes of more than $10,000, according to Attom Data Solutions. Many Bay Area residents did not feel the full effect of the new federal tax law on their finances until they filed their 2018 tax returns in 2019.
The departure of higher-income residents is worrisome for those who remain in the Bay Area, left to pick up the tab for the state’s long list of financial obligations.
New arrivals were less affluent in Alameda, Contra Costa, San Mateo and San Francisco counties. The only exception was Marin County.
The IRS data shows that those who moved out of San Francisco County between filing their tax returns in 2017 and 2018 had taxable income on average of $150,905 vs. $117,321 for those moving into the county.
Those figures don’t come as a surprise to accountants serving as field guides for the affluent leaving the state.
“I think new arrivals to the Bay Area are younger and at the beginning of their careers, so it makes sense there is an income shift,” said Paul Bleeg, a partner with accounting firm EisnerAmper in San Francisco. The income figures are averages based on the number of tax returns, so a few high-income taxpayers on the move could have a significant impact on the number.
“I’ve seen a quiet migration out of the state,” Bleeg told me. “My clients and others cite the high taxes." Bleeg and others tend to date the Bay Area exodusto 2012, when a state income tax increase pushed the top rate to 13.3%.
“Many of my clients are in companies that have recently gone public and they have considerable wealth tied up in founders shares,” Bleeg said. “So the strategy is that they move to Nevada, Washington or another state with no state income tax and then sell their shares once they have terminated their California residency.”
In addition to taxes, the Bay Area’s high cost of living is another reason some leave.
“The cost of housing is also a factor,” Bleeg said. “Everyone knows we need more housing but no one wants it in their town.
“NIMBYism is rampant, and it’s so unfortunate that we make it so hard on young people to afford a house within an hour’s commute of where they work,” Bleeg said. “I love the expression, ‘Pull the ladder up, I’m aboard,’ meaning, ‘I’m OK, I got mine, damn the rest of you.'”
People incoming are almost always going to have lower incomes than people in the Bay Area for obvious reasons.
It would be way more interesting to understand the actual wealth disparity and age between the two groups.
True but the article is comparing incoming and those leaving.
It would be a problem only if this flow reduces the average income for SF. That means only if the flow is large enough. I have not seen any data suggesting that average income actually went down. Until we see that I’d just bin it as sensational journalism.
I have long argued that the most effective way to force change is voting by feet. If enough people left CA and Bay Area to drag its economy down local governments will change their way. Right now Bay Area is like the prettiest girl in the party and everybody is trying to dance with her. Yeah, I am talking about VC money again. Where is the incentive for change?
Boys’ view. Men prefer Jeff Bezos’ type.
That would be too late. Hard to stop a stampede. You have went to the wrong school. Send your children to Singapore to learn proactive planning!, and how to 闻一知十 and 舉一反三.
This is just basic math. There is internal growth that generates money, and external net flow that seems to be taking it out according to this article. Which effect dominates is easy to determine: just look at the resulting number. CA and Bay Area in particular are still raining money.
Take that example given in the article: people hitting the IPO jackpot and leaving CA to avoid taxes. First there has to be IPO’s, and the lion’s share of mega IPO’s happen right here in BA. Let’s say 100M of this new IPO money is distributed among 1000 employees. How many of these people will choose to leave and how much money do they take away? Unless you won 5M+ do you have enough to leave the gold mine to retire? How many people won 5M+ and how many among those will leave? Do the math and you won’t freak out over the flow.
Focus on BA’s intrinsic capability to generate wealth, not how many choose to leave.
Moving is a big change for many, including retirement.
If someone invests $2M in stocks (simple VOO like a common man blind buy/hold), they get $120k (least 6% long term conservative return) which is more than enough to continue their life here.
Once people reach this level, they will not move out CA for tax reasons as they enjoyed local area, friends and family.
See why is so easy for me to move 
Case to case difference is there.
We were around 15+ friends, whoever unable to buy home here, moved out.
Whoever stayed here, after buying primary home, never moved out. Most them bought homes between 500k to 800k level.
I moved out after 50 years. Most of my close friends left years before I did. I owned my own house. Now I own two.
This has gone too far. I may need to yellow flight.
Your option is Austin or Singapore. HK is out because of protests. Seattle is out because of Covid-19. Bay Area may follow Seattle soon so is also out. You are running out of options.
A person recording the video told the victim to “go get your cans” and someone said: “I hate Asians.”
This is the 2nd post that you posted where a Black man assaulted an East Asian right? I recall the first one is about a Chinese woman wearing a mask and a Black man punching her shouting “Don’t touch me”. Americans feel guilty of their past treatment of Blacks and exhibits leniency for Blacks (the PC is color? I don’t follow the trend much. I know n word is out, not sure about B word). As for why Black now hate Asians, I don’t know when it’ve started. It could be the usual problem of East Asians doing very well economically - in some places, there are genocides against East Asians, surf the web 
if you are not aware.
Article seems to indicate the victim was OK with this. Wonder what sort of pressure, if any, was put on him.
You an always move to AZ. Walk into DMV, get your driver’s license, take it across the street to the gun store, select something nice, load it and strap it on. No carry permit needed. Carry open or concealed - your choice. Problem solved.
Bernie Sanders took home Colorado, Utah, Vermont and California.
Since @manch doesn’t like Sanders, should move to Austin, Texas where Biden won.
Utah is a red state. The Bernie supporters are a fringe minority.
On the defensive. They are well aware of public perception.
Authorities believe the uptick in crime is linked to short fuses and feelings of desperation because of the pandemic. But they say anyone who thinks San Francisco is soft on crime is wrong.
“Let’s dispel the myth right now that there are no consequences for committing crimes in San Francisco,” Breed said.
Lol, what’s the penalty for breaking into a car? What about breaking into a vacant home and living in it?
I know one vacant home in Tahoe. 3824 Figueroa. Empty. Should be condemned. But has a fireplace. Better than sleeping in the snow.