Source: Forbes
Everything is big in Texas. Except, it would seem, when it comes to taxes.
Nobody seems to know this better than Toyota. The automobile manufacturer announced today that it would move MOVE -5.9% its headquarters to Plano, Texas. As a result, Toyota’s three current headquarters locations in Torrance, California; Erlanger, Kentucky; and New York, New York will be consolidated into a new space beginning this summer. The final move should be completed by 2017.
Jim Lentz, Toyota’s Chief Executive Officer for the North America Region, said about the move:
With our major North American business affiliates and leaders together in one location for the first time, we will be better equipped to speed decision making, share best practices, and leverage the combined strength of our employees….This is the most significant change we’ve made to our North American operations in the past 50 years, and we are excited for what the future holds.
It’s a move that most agree makes sense for the company. But what about the company’s employees?
Currently, 3,000 of Toyota’s 5,300 California employees are slated to move to Texas. Another 1,000 Kentucky employees are expected to follow suit. They will literally be taking Toyota’s slogan, Let’s Go Places, to heart.
How will the move affect those employees? When it comes to tax dollars, most of those employees will also be better off after the move. According to an analysis from the National Center for Policy Analysis’ State Tax Calculator, those employees moving from California to Texas could gain thousands of dollars in tax savings; over a lifetime, it could add up to more than a million dollars in tax savings.
The National Center for Policy Analysis (NCPA) ran a few scenarios comparing the after-tax salaries in various capacities and here’s how the numbers worked out:
- A 30-year old single California renter earning $75,000 annually and could gain an additional $14,909 in discretionary income by moving to Texas; if saved and invested this would amount to $1,513,727 over her lifetime.
- A 30-year old single earning $100,000 a year in California could gain an additional $14,653 a year in discretionary income, and $1,487,723 over her lifetime.
- A 40-year old married California homeowners earning $150,000 a year could gain an additional $2,535 a year in discretionary income, and more than $209,000 over their lifetime.
NCPA Senior Fellow Pamela Villarreal said about the calculations, “The main focus of Toyota’s announcement has been on the company’s savings but there’s also a story here about the impact on Toyota workers who make the move.”
Curious to see how such a move might affect you? Check out the NCPA state tax calculator and plug in your own scenario. The calculator, developed by the NCPA, computes the difference in the amount of federal and state income taxes, property taxes and sales taxes you could expect to pay over the rest of your life when you move from one state to another. The answers just might surprise you.