| | | ... For starters, I ask Villarreal to test the move that many people are making every day, from California to Texas. We do this by using as an example a 40-year-old worker who is single and earns $70,000. We'll call her Charming Angela (CA). She has $70,000 in retirement accounts and $70,000 in taxable savings. She rents in California at $1,500 a month and intends to rent in Texas at the same amount.Villarreal presses the "calculate" button.
The screen blinks. The results appear in a flash. Charming Angela will gain $1,615 a year in spendable income by moving to Texas. If she saves it rather than spends it, she'll have an additional $133,593 in her estate.
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"What if she moves so she can become a home-owner?" I ask. Villarreal has Charming Angela take $40,000 from her taxable savings for the down payment on a $200,000 condo. It has a $160,000 mortgage, with an $810 monthly payment. She presses the "calculate" button again.
A whopping estate
We gasp. "Maybe we should call her Lady Gaga!" Villarreal exclaims.
Moving to Texas to become a homeowner will add $12,692 a year in spendable cash. It will do this every year for the rest of Charming Angela's life. If she saves the additional spending power and maintains her current spending level, the move will increase her estate by a whopping $1,049,571. All in dollars of today's purchasing power.
The big benefit here doesn't come from escaping the California income tax. Virtually all of the benefit comes from moving from a state where many middle-income people can't afford homes, to a state where they can.
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