A large number of our friends are either retired, semi-retired, or are in the process of deciding when to retire.
The number one topic of discussion among these people is becoming where to establish their residence upon retiring. You would think most would retire locally and live where their friends and families have resided for so many years. Especially because Washington is one of the nine (I think) states that does not have a state income tax. However all forms of taxation are now driving more and more of their decision concerning where to locate.
Local discussions used to revolve around which states had no income taxes and would these states have the quality of life the retirees would desire. Recently in the state of Washington the legislature passed a "Death Tax" which could result in a significant percentage of one's estate to be taxed upon their death. The amount that is fenced seems to be one million; anything over that would subjected to a tax. When I say to my friends - yes but why worry, how many of us will have an estate over $1 M? It is surprising how many (never divorced) retirees that have had solid professions or businesses and good investments will in fact have over $1M estates.
Many of our retired friends now live, at least part time, in California, Nevada and/or Arizona. Some still maintain their primary residence in the state of Washington and live in their retirement homes only during the winter months.
It appears California has passed, or has contemplated legislation that would cause people that live in that state less than 6 months of the year to pay a prorate income tax based upon the percentage of time they live in California. And of course we have all read about professional athletes having to pay a share of their salaries to California based upon when they play a game in that state. California tax issues are unnerving many of our friends who have winter homes in California.
Perhaps the one good thing California has done in the tax arena is to pass Proposition 8 which allows individuals to be paid money back from their property taxes in cases where it can be shown that their property has decreased in value. If fact some communities in California are working on "blanket" methods to establish areas where property values have decrease such that they can refund automatically based upon the value decreases.
All of the above are creating some interesting factors for consideration with our friends who are thinking about where to live when they retire.
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