By Dr. Jim Dahle, WCI FounderI love California from Mt. Shasta to San Diego. I love Yosemite, Sequoia National Park, the Sierras, Joshua Tree, and Idyllwild. It has awesome beaches, great mountains, and great deserts all in the same state. The weather is always spectacular and the cities have tons of fun stuff to see and do. Sure, it has a nasty little earthquake and forest fire habit, but there are lots of opportunities in California that can't be found anywhere else. In addition to these unique aspects, many people have family in California and want to live close to them. Given the plethora of academic institutions there, many subspecialists have found a niche for their practice that cannot easily be replicated elsewhere. Other docs, due to religious, racial, or political issues feel strong ties to the diversity available in California.
Despite all that, I continue to be surprised and appalled at just how difficult it is for a physician to get ahead in California. In email after email I receive from doctors in that great state I hear similar struggles. The original title of this post was “8 Reasons California…” As you can see, it got worse the more I researched and wrote. The economic costs of practicing in California are above and beyond the so-called “Sunshine Tax.” Perhaps the best possible move a California physician struggling with financial issues can make is to move somewhere else. Where should they go? Practically anywhere else would be better from a financial perspective.
Perhaps the best possible move a California physician struggling with financial issues can make is to move somewhere else. Where should they go? Practically anywhere else would be better from a financial perspective.
12 Reasons Doctors Struggle to Get Ahead in California
# 1 The High Cost of Living
Everybody knows about this one. Part of this is “Sunshine Tax.” People are willing to pay more to live in places with nicer weather and more to do. Part of it is that, on average, jobs in California typically pay more. For instance, the average teacher in California makes $85K, $36K (61%) more than in my home state of Utah. Nurses make 72% more in California, $100K versus $58K in Utah.
How about for doctors? Well, the salary info isn't quite clear. For example, one source suggests California docs from family practitioners to orthopedic surgeons are paid 15-18% more than Utah docs. Other sources suggest just the opposite, ranking Utah 24th and California 32nd in average physician salary. But either way, it is clear that the difference between a doc in California and a doc elsewhere is nowhere near the difference in other professions like teaching, nursing, and particularly technology workers!
So what costs more in California? Well, housing is the big one. The average home costs $546K in California. Utah is no low-cost housing mecca, but the average is $325K. It's $287K in Nevada and $139K in Indiana. $546K might not seem too bad, until you realize that is only 1/3 of the average in the Bay Area–$1.6M. In case it isn't abundantly clear, the average California orthopedist has to stretch to buy the AVERAGE house in the Bay Area and that house is completely unaffordable for the average California family practitioner.
Don't underestimate the effects of these higher costs on your ability to build wealth.
# 2 High State Taxes
Sure, you might get paid a little more in California, but that's only when you look at your gross income. You won't notice nearly as big of a difference in your net income. There are two reasons for that. The first is that our country has a progressive income tax. You would think that paying a higher cost of living would be canceled out by making more money, but the truth is that the income tax brackets don't cut you any slack for that. The tax brackets are only based on your income, not your expenses.
But wait, there's more. California is also notorious for its state income tax. Check out these brackets from 2018:
That's right. It tops out at 13.3%. There are federal brackets lower than that. Most docs won't be paying 13.3%, they just don't make enough. But they'll all be in at least the 9.3% bracket, and many will hit double digits. By the time you apply both your higher federal tax brackets and the California tax brackets, there won't be any of your increased salary left to use for the high cost of living. The only nice thing I can say about California taxes is that at least they don't have a city income tax like New York City.
I'm not looking forward to doing my first California tax return in 2019. Not only will I be paying 13.3% on every dime I make from Passive Income MD, but I'm told by some Californians that their state income tax return is longer than their federal one! This WCI Network thing would be a lot better if I could talk PoF into moving to Texas, PIMD into moving to Nevada, and TPP into moving to Florida!
# 3 Lots of Wealthy People
A third issue with physicians trying to build wealth in California is that California is seemingly filled with tons of wealthy people. It turns out that 75% of Californians are in the top quintile of income nationwide. In most places in this country, physicians buy houses in the nice neighborhoods and send their kids to the best schools. In California, those docs are competing with dot-com millionaires for those houses. In addition, thanks to the run-up in housing prices, many relatively middle-class Californias are millionaires and multi-millionaires just by virtue of having arrived there before you. Now, those folks can never move to another house in California thanks to the 1978 Proposition 13 that locks in your property taxes until you move, but you still have to compete with them to live in a nice area. Instead of being in the top 1-2%, docs find themselves merely in the top 15% or so.
# 4 Low MediCAL Payments
I was actually surprised that some doctors might get paid more in California, because that has not been my experience talking to friends in my specialty. One of my partners moved here from California and nearly doubled his income. Part of the reason for this is that a large percentage of California ED patients are on Medicaid (called MediCAL to be cute). Nationwide, the average is 32%, but in California, it's 43%. To make matters worse, MediCAL also pays worse than Medicaid in many states. Utah isn't exactly known for awesome Medicaid payments, but a level 5 ED visit here pays $133 (compared to $175 for Medicare). In California, it's only $108. So if you're in a practice that sees a lot of MediCAL patients, you probably won't be paid more in California than you might elsewhere.
# 5 High Transportation Costs
If you've ever driven through California, you may have noticed that it was a rather expensive experience. California has very strict environmental laws, which increase the cost of vehicles sold there. To be fair, California is such a huge market that most car makers have just adopted California standards for all of their US-sold cars. California competes for the highest gas tax in the country at 76.7 cents per gallon. To make matters worse, sales tax on it is calculated AFTER the excise tax is applied, so in a way, you're double taxed.
What's worse, however, is that Californians have notoriously long commutes and sit in traffic for lengthy periods of time, so you end up buying more of that overpriced gasoline. Californians commute an average of 28.9 minutes, the fifth longest in the country. To make matters even worse, it's my observation that Californians tend to drive nicer cars than many other places. Maybe that's because they're wealthier on average, or that they wear cars out faster due to all those commuting miles, or perhaps they just look nicer due to less rust from snow and salt. But the urge to keep up with the Joneses in the car department seems quite high as I drive around.
# 6 Health Savings Account Taxes
My favorite investing account is a Health Savings Account (HSA) because this Stealth IRA is triple tax-free. You get a federal income tax deduction when you put money in, it grows in a tax protected manner, and then when you pull the money out, as long as you spend it on health care, you don't pay any taxes either. In most states, you also get triple tax-free treatment with regards to state income taxes, but not California (and New Jersey.) HSA contributions aren't deductible in California. Why not? Just because.
# 7 No 529 Tax Benefit
California actually has a pretty decent 529 plan, with nice low-cost investments and reasonable fees. But unlike dozens of other states, there is no state tax deduction or credit for contributions.
# 8 SALT Deduction Limitation
# 9 LLC/Corporation Annual Fees
Many doctors and other business owners form an LLC or Corporation for various reasons. There is usually a fee that you have to pay to the state each year for this. In Utah, it's $15. In California, it's 53 times as high – $800 per year. Ouch. At least you get to pay it with pre-tax dollars since it's a business expense.
# 10 Weak Asset Protection Laws
Although California's malpractice environment is head and shoulders over places like Dade and Cook Counties (thanks in part to a $250K cap on pain and suffering), the fact that the people you may damage have higher incomes probably makes up for it. In addition, California is notorious for its weak asset protection laws. Although it protects 401(k) assets, California judges are known to routinely pierce IRAs, at least any amount above and beyond what is “reasonably necessary for the support of the debtor and dependents.” I'll bet my opinion of that amount is quite different from that of a California judge. Don't run to whole life insurance instead — only $9,700 in cash value is protected there and annuities get no protection. But at least you've got that big house right? Not so fast. This isn't Florida or Texas. Only $50-150,000 of those millions in home equity you've got are protected from your creditors. California doesn't have an asset protection trust either. One small consolation is the existence of a little known law that allows for a (probably un-qualified) “Private Retirement Plan” which can protect assets in California.
# 11 Highest Priced Disability Insurance
California is also notorious for particularly high disability insurance rates. If you'll be moving to California for or after residency training, you'll almost surely want to get your disability policy in place before you go.
# 12 Crazy Legislature/Laws
The California legislature is not known to be a particularly physician friendly body. As a full-time assembly, most legislators are professional politicians. Now, don't get me wrong, there are crazy anti-doctor laws being debated all the time including this idiotic one in Utah a few years ago. But California seems to go above and beyond. Perhaps the most recent one is illustrative. Although it hasn't passed (yet), this bill would essentially allow the state to fix all of the prices for physician services as a percentage of Medicare payments. Anesthesiologist Linda Herzberg, MD, described it like this:
When you set payments at percentages of Medicare to a state GDP cap, prohibit physicians from participating in the price-setting commission, and use physician licensing fees to pay for the commission to fix their prices, I’m not too interested in continuing a discussion about how this might work, even if the bill is revised. To quote the CMA letter, “Physicians are not a public utility and should not be treated as such.” If enacted, this bill is more likely to dramatically restrict patients access to care, promote early physician retirements and a physician exodus from California, as well as deter the entry of young physicians into practice in California, than anything we have seen to date.
There seems to be no end of crazy ideas coming from this body. How about this one to tax text messages applied retroactively?
Move or Deal With It?
It's obviously not impossible to get ahead as a doc in California. One need look no further than our WCI Network partner Passive Income MD. This anesthesiologist and his physician wife own multiple different businesses and are doing just fine. Okay, maybe that sentence confirms my hypothesis rather than providing evidence against it. Perhaps this post illustrates the reason why PIMD started looking for additional income in the first place!
If you're not in that sort of financial situation, you've got a hard decision to make. You can leave California and acquire wealth relatively easily simply by seeing patients, carving out a big chunk of your income, and investing it wisely. Or you can stay and make do as best you can. You may want to put more time and effort into building a side business than you otherwise would. You'll likely need to work longer to reach financial independence. You may need to take on more leverage risk or market risk to reach your goals. You'll probably find yourself feeling much more middle class than you otherwise would. Hopefully, your partner's increased salary can help make up some of the difference.
Now I'm sure I'm going to get roasted for this post by the 12% of my readership from California, but that's okay. Just don't expect a response before Saturday as I will be out of cell phone coverage all week while exploring Southern Utah. My staff is now all back from their backpacking trip last week, so feel free to ping them if you need anything while I'm gone.
What do you think? In what other ways is it difficult for physicians to build wealth in California? Have you moved from a high cost of living area to a lower cost area? What was it like? Have you decided to stay in California? What sacrifices have you had to make to do that?
My husband and I are from California originally. We also noticed that beyond paying poorly, many private practice groups in desirable areas of California are downright malignant.
I interviewed at one that has chewed up and spit out 5 first-year attendings every year for the last 5 years.
And why wouldn’t they? Plenty of residency programs in California and people are (were?) beating down the doors to live and practice there. There’s a never ending supply of suckers ready to take the current one’s place.
We no longer live in California and took jobs that pay collectively 5x as much as the best combo we could’ve found in California. We fly back (first class) to vacation 2x/year. We fly family out to visit us 2x+/year. We are more than happy with this arrangement.
In #2 you said, “The only nice thing I can say about California taxes is that at least they don’t have a city income tax like New York City.” I paid business taxes for a few years while doing business in the city of Los Angeles. I believe that, technically, this was a County of Los Angeles tax. However, I feel that claiming there is no city income tax is pretty misleading. I appreciate your willingness to say a nice thing about California but I don’t feel this statement reflects the reality of doing business in LA.
Maybe that should be # 13.
California also taxes capital gains at your marginal state income tax rate. 🙁
Ugh. That’s brutal. I should have added that one in as # 13.
I don’t know that it is terribly unusual though. I think Utah might do that too, but at least it’s only 5%.
We moved from a very HCOL area right out of residency. About 10 years later we are financially independent.
We chose freedom over “nice weather “ and “culture always diversity.” We are thrilled with our decision.
Over those 10 years we have traveled all around the world and continue to travel today.
My wife was weighing a job in LOCL midwest city vs. VHCOL bay area (fyi, she chose the bay area job principally b/c it was a better fit for her career). During one of our pro/con debates I said something to the effect of, “we can move to LCOL city and use our money to travel anywhere in the world or live in VHCOL city and not travel much… but truthfully, I only want to travel to California.”
Note: my wife does not necessarily share my sentiments; but if I lived elsewhere, I’d certainly fly back at every opportunity.
As the saying goes, “If you don’t live where your wife wants to the first time, you will the second time.”
I know how you feel. There are lots of things I’d rather do in Utah than travel all over the planet, but my wife prefers international travel and doesn’t mind the airport/airplane/taxi/hotel thing nearly as much as I do.
Regarding California Private Retirement Plans (PRP), is a Cash Balance Plan considered a PRP in California? It seems to fit the definition, i.e. actuarial based, managed by a third party.
No, those are generally non-qualified. So a CBP would be better. But if you wanted ANOTHER asset protected plan that would be one to consider.
I’m from Texas originally, moved to Boston for residency/fellowship/early career, then was recruited to LA. Sticker shock each time, yes. But the pay is much more in LA than Boston, with good incentives, opportunity for side gigs, and much better medmal than the east coast. Overall, I think if you want to live in an urban area, it evens out. The biggest impact to us this year was the new tax law – lower bracket but $40k in write-offs … poof, gone with the wind. And I’m gay so I won’t be moving back to Texas ever, it’s worth the extra money to stay away.
This is one of the things that make our country great! We have 50 states to choose from. Some states that I would find terrible others absolutely adore . No where is perfect but in America you can find someplace as close to as possible if you are flexible and willing to move.
I do not see the value in living in a HCOL area. Those that do just need to understand that just living there is a luxury and they might miss out on other things. It is not a bad choice. But a personal one and you need to know what you value.
However those who live in a HCOL area and throw up their hand and buy the 5X home, cycle luxury cars, private school, expensive vacations, second homes, pay for expensive college, etc. That is when you get into trouble. Most docs can afford one or 2 of those things but not all. Out of all of them the HCOL area is probably the most expensive.
California is not for everyone…this is a true statement. As a Californian I know the negatives but I am willing to pay them because of all the benefits I gain by paying that price. That being said as a physician with multiple “side jobs” that I enjoy becoming FI is not difficult. FI requires discipline regardless of location. If you are not a disciplined person then maybe Ca is not for you as the mundane will eat your bottom line. However if you budget appropriately becoming FI can occur anywhere. I just recently sent an email to WCI talking of my FI and asking now what?… This happened in California.
Nice work.
” 75% of Californians are in the top quintile of income nationwide”
I did not know that. Just curious… where did you see this data point?
If there’s no link, I don’t know. It’s been months since I wrote this. I know I did look it up and found that so I’ll bet some quick Googling will likely find the same source.
Great post!
Reason #3 “In California, those docs are competing with dot-com millionaires for those houses.” Keep in mind that these dot-com millionaires have no where else to go. They need to stay near their headquarters if they want to continue to be millionaires. They are not going to give up. We have choices. We can be a millionaire anywhere.
Wow two pages of comments! This is a topic that touches a lot of nerves.
Having recently begun my journey to financial independence, I’m acutely aware of the kick in the paycheck you get as a Californian from the taxes. The changes to the SALT (state and local tax) deductions really hurt us this year, as our real estate taxes were unfortunately way over the $10k deduction limit. And also the general cost of real estate, gas, and food… yes, it’s a lot in Southern California.
But I wish I could post a picture here of a snapshot I took of my weekend run on the bike path in Santa Monica Beach.
After 10 years of living here, it still never gets old to be jogging on that path, with the sun and the sand and the ocean air. It’s intoxicating! If it takes a few more years until I’m financially independent, I could live with that, I think.
— TDD
I have family in the Los Angeles area and it is definitely an expensive place to live in. I have family members who work as a nurse and respiratory therapist and they both make a lot more money than they would in Arkansas where I work. However, they have mounds of debt (mortgages, student loans, credit card debt, etc.) as well as their close friends. Reaching FI is not a realistic goal for any of them. I’m only familiar with a very narrow slice of Los Angeles and this may not be generalizable to the vast majority of folks. However, if you have senior citizen family members who are legal, but not yet citizens of the U.S., I have had very positive experiences with California. MediCal has covered pretty intensive and consistent medical costs including prescriptions, in hospital costs, surgeries, etc. There is some service that even covers Uber rides to medical appointments that I don’t totally understand. In contrast, I have a friend in Arkansas whose noncitizen family member became ill in Arkansas and it was a financial disaster even though it was a non-critical care in-patient stay that lasted about a week and no surgery was involved. His physician friends wrote off their professional fees, but he still got nailed with a bill I presume was tens of thousands of dollars (I don’t know the exact amount, but a payment plan was set up to pay it off over several years). Thus, if you have elderly parents that you care for who require consistent healthcare without traditional healthcare insurance, then I would factor this into your decision making matrix with regards to where you decide to settle down as well. MediCal has taken good care of my family members with chronic healthcare issues in Southern California.
This is why, as a 3rd year medical student in California, I have no plans to stay or do a residency in this state. Why would I choose a state to practice in that a much larger margin of my income goes towards my taxes, mortgage and insurance vs getting almost the same and not fight with these issues to the same extent. That is why I am currently looking at Nashville, Ashville, Maine and Washington State (given Seattle doesn’t keep growing ahah).
Spent my entire medical career In California, mostly on the central coast. I looked at jobs elsewhwere, but couldn’t stand the gray skies, cultural monotony or absence of terrain. Without really trying, I’ve done very well financially, perhaps the entrepenurial attitude in CA helped (I’m not in a well paid specialty). Our kids did well in public schools (this is not LA or SF) and went onto Ivy league universities. Agree, it is more difficult for young docs coming out now, but working in CA does not doom you to poverty.
Dear WCI
This is perhaps an unrelated question but one I have been struggling with for few months, no one so far has been able to help me out understand this and I think you would be the right person.
I am a California Psychiatrist age 46, and have an S Corp. I will make approx. 60 to 70 k per month and planning to take 4 weeks vacation.
I pay myself approx. 16 k per month and put 20 k per month in a DB plan
Besides payroll taxes how much would be the additional taxes on my shareholder distribution of approx. 30 k per month or more.?
Would appreciate your feedback and breakdown and also your advise on how to shelter from taxes.
Sincerely,
ocmd101
Wow! Great income!
Sounds to me like you’re going to be paying upwards of 35% on those distributions once you add in Federal and State. This is a better question for your tax preparer that has all your info. Take a look at the federal and state brackets and you can get a close estimation yourself.
I like the article overall. But several of these points paint with too broad a brush. Looking at average home prices really isn’t helpful. The average is skewed by SoCal and the Bay Area. California is a huge state. The housing prices in many other parts of Northern California and the Central Valley are quite reasonable.
Practicing cardiology in Northern California, my salary is more than double what my friends in the MidAtlantic region are getting paid. And their housing costs are at least as high as this area.
I think WCI makes very good points, but remember California’s size. There are many pockets that differ dramatically from the Bay and LA.
Excellent point on cost of living. Unfortunately, the state income tax laws are the same everywhere within the state.
For those of you who think the SALT limitation increased your taxes: did you pay the alternative minimum tax in 2017 and years before? Look at form 1040 line 45 and multiply it by about three as a guesstimate.
Even living in a lower tax state (Arizona), my SALT deductions were limited by the AMT. If I had California rates my deduction would be the same.
If you earned enough to get phased out of the AMT you can afford to pay the taxes. Like over $600k #firstworldproblems
I agree that CA has higher property and state taxes, but the AMT limited deductions of these items even before SALT limitations.
” I’m gonna be a happy idiot and struggle for the legal tender”
Jackson Browne- The Pretender
I guess I’m one of those happy idiots, but I don’t seem to struggle for the legal tender. I believe the reason why is that I started following the WCI shortly after he started the blog back in 2011 along with some good fortune. Learned a ton about finances and have been living lean and mean ever since. Probably will have one of the recommended financial advisors on the blog to take a look at everything I’m doing to make sure I’m not off course.
I agree with everything WCI says about California. I tell the anesthesia residents I train to head home after their training is over, I don’t know if they listen. They definitely become intoxicated by the so. Cal lifestyle. I feel terrible for the Junior attendings just out of residency and fellowship. We are talking mountains of student loan debt for them.
My wife is happy to be close to her family here in southern California., thus happy wife=happy life.
The rest of my atypical(maybe) financial story is being told so that it may help others:
I’m fortunate that my spouse is not a big spender.
We don’t keep up with the Joneses.
We drive well maintained beater cars.
We live out in the (909) aka the Inland Empire, not Calabasas, OC, or West LA.
However we did send our children to catholic parochial and high school despite being in a fantastic school district, and definitely don’t regret that decision.
I’m an Air Force veteran, so my children go to community college, Cal State University, or University of California tuition free through the CALVETS tuition waiver program (still have to pay for room and board though). 529 is almost funded.
Working in an underserved area( county medical center) had its advantages. I received a loan repayment award of $105,000.00 through the Steven Thompson Loan repayment program. Its hard to bad mouth California when they handed down that award to me and my family.
I’m now a federal employee (VA ) socking away money in TSP.
My overall savings rate fluctuates between 17.5 and 20%.
If the VA doesn’t implode in the next 11 years I’ll get a defined benefit plan at 63 , along my military reserve defined benefit plan . I work a 40 hour work week, compressed into 4 days.
Nothing lasts forever. We will stay lean and mean and continue to be happy idiots out here in LA LA land.
I have practiced in CA for over a decade.
My income has decreased at a rate of 3-6% per year, and consequently, I have had to work more to maintain a steady income stream.
Starting salaries for Coastal CA are among the MGMA ‘s lowest.
More and more physicians have ended up taking a hospital employed position as the financial cookie has crumbled. Although these jobs offer financial security in the short term, the pay is far less than docs made 10 years ago as private practitioners.
Many trauma-call/ER stipends for orthopaedics, neurosurgery, GI, ENT and plastics are either nonexistent, or a fraction of what docs get paid elsewhere.
Lastly, many HMOs dominate the Coastal CA landscape, and they trump any ancillary income from ASCs, and imaging centers.
Very well written article. I totally agree with all these comments.
In addition when the real estate bubble popped many people including family were underwater. This was a really stressful and difficult. I did not know about the asset protection. It would be good to put your assets in a trust in a different state.
As a tangentially related question – how would being RETIRED (as a ‘snowbird’ from the Northeast) fare, renting in the San Diego area for 4 months/yr in winters? Clearly, many of the factors here would be non-issues, but rental costs, transportation costs, sales tax and just general HCOL are in play. This decision is competing w/ Naples or Sarasota, Florida which offer the potential (so far vs my Derm wife’s wishes who is almost neurotic about excessive sunshine!) to live there 6 months + to claim residency w/ all of the attendant tax and COL advantages (although these are 2 of the highest FL COL areas, but overall still pales compared to CA when taxes are factored in). Any thoughts…?
How would it compare? It would cost more. If you can afford it and it is worth it to you, go for it.
Although there is much truth in this post, I think a critical oversight is that not all of California looks like the coastal urban centers. I live on the Central Coast in one of those premium vacation destinations about two hours south of San Francisco. Housing is half price or less than Silicon Valley in a far superior physical environment and physician wages are higher because supply and demand is on our side.
California is expensive, no doubt. But my rent when I finished residency last year in this same area was on par with (actually still slightly LESS THAN) what I paid as a student in Texas three years prior for the same size space. The view from my bedroom is the Monterey Bay and I can walk to absolutely everything. I know I could have lived anywhere and will have to be smarter about my finances in the long run as a result of choosing to settle here. But I’m currently making a very comfortable salary no matter who I’m compared with even as a primary care doc (actually blew away one of our Orthos when he heard how much), creating my own schedule among various sites with total freedom. I don’t get too bent out of shape about the taxes knowing we’re actually paying for social benefits the Texas legislature is too blind to see the point of.
I can respect California may not be everyone’s cup of tea and there are certainly trade offs. But I don’t think anyone could look at my current scenario and want for much more.
Glad it’s working out great for you!
I dropped my CA license when CA placed a tax exclusively on physician’s to pay for physician scholarships with a commitment by those docs to practice in undeserved areas. A benefit for all CA residents placed as a tax exclusively on physicians? The following year CA lost more licensed physician’s than they gained on their new tax on physicians. Net negative income for rhe state. It goes on and on. The governor has no skin in the game as he promises free health care for everyone. He’s not the one up 24/7 taking care of the patients and less and less every year. He’ll be home in bed or hobnobbing with the CA elites. Ask yourself physician’s have the highest professional suicide rates. We go into medicine with the highest ideals and find out we can’t take care of our own families properly, or ourselves. We have become the monetized football of political free everything for everybody politicians. Who pays for that from the trenches? Hint not the politicians and the vote those politicians into office public. The public will get what they pay for.
Forgot-Sacramento could care less. They won’t stop until they get their endgame, socialized medicine with all state employed healthcare workers.
Not familiar with that tax, can you explain more and include a link? There was something similar debated in Utah a couple of years ago I wrote about:
https://www.whitecoatinvestor.com/utahs-proposed-tax-on-doctors/
(a)(1) In addition to the fees charged for the initial issuance or biennial renewal of a physician and surgeon’s certificate pursuant to Section 2435 , and at the time those fees are charged, the board shall charge each applicant or renewing licensee an additional twenty-five-dollar ($25) fee for the purposes of this section.
(2) The twenty-five-dollar ($25) fee shall be paid at the time of application for initial licensure or biennial renewal and shall be due and payable along with the fee for the initial certificate or biennial renewal.
(3) On or before July 1, 2015, the board shall develop a mechanism for a physician and surgeon to pay a voluntary contribution, at the time of application for initial licensure or biennial renewal, for the purposes of this section.
(b) The board shall transfer all funds collected pursuant to this section, on a monthly basis, to the Medically Underserved Account for Physicians created by Section 128555 of the Health and Safety Code for the Steven M. Thompson Physician Corps Loan Repayment Program. Notwithstanding Section 128555 of the Health and Safety Code , these funds shall not be used to provide funding for the Physician Volunteer Program.
(c) Up to 15 percent of the funds collected pursuant to this section shall be dedicated to loan assistance for physicians and surgeons who agree to practice in geriatric care settings or settings that primarily serve adults over 65 years of age or adults with disabilities. Priority consideration shall be given to those physicians and surgeons who are trained in, and practice, geriatrics and who can meet the cultural and linguistic needs and demands of diverse populations of older Californians.
This was instituted many years ago when I dropped my license. It is a fee tacked onto your license. A fee is a tax. I lump all monies taken from your wallet into governments coffers a tax, no matter what it is technically called.
(a)(1) In addition to the fees charged for the initial issuance or biennial renewal of a physician and surgeon’s certificate pursuant to Section 2435 , and at the time those fees are charged, the board shall charge each applicant or renewing licensee an additional twenty-five-dollar ($25) fee for the purposes of this section.
(2) The twenty-five-dollar ($25) fee shall be paid at the time of application for initial licensure or biennial renewal and shall be due and payable along with the fee for the initial certificate or biennial renewal.
(3) On or before July 1, 2015, the board shall develop a mechanism for a physician and surgeon to pay a voluntary contribution, at the time of application for initial licensure or biennial renewal, for the purposes of this section.
(b) The board shall transfer all funds collected pursuant to this section, on a monthly basis, to the Medically Underserved Account for Physicians created by Section 128555 of the Health and Safety Code for the Steven M. Thompson Physician Corps Loan Repayment Program. Notwithstanding Section 128555 of the Health and Safety Code , these funds shall not be used to provide funding for the Physician Volunteer Program.
(c) Up to 15 percent of the funds collected pursuant to this section shall be dedicated to loan assistance for physicians and surgeons who agree to practice in geriatric care settings or settings that primarily serve adults over 65 years of age or adults with disabilities. Priority consideration shall be given to those physicians and surgeons who are trained in, and practice, geriatrics and who can meet the cultural and linguistic needs and demands of diverse populations of older Californians.
Interesting. Thanks for the explanation.
I did residency and fellowship in SF Bay Area. Have family there and loved it and would have stayed forever if the finances made sense.
Moved to Denver post training. Pay in my specialty at the time was more than 20% higher in Colorado (the gap has narrowed since, but is still generally 10% higher).
The difference in the cost of a comparable home at that time was about 700K. There are also significant differences in state taxes and other costs, almost all favoring Denver.
Over the course of my 20 year career, that cost and pay difference with associated investment gains is more than 2 million dollars. If you do the math on my specialty for a rural position in the Midwest, the numbers are even more preposterous.
I’m not willing to pay 2 million plus to live in the Bay Area vs Denver, but I am willing to pay a million or more to live in Denver vs a rural area with fewer amenities.
Lots of people in and outside of medicine are doing this same math, hence the rise of many second tier cities like Denver, Portland, Austin, etc.
Bay Area does make sense for some dual income physician couples, particularly if one spouse is in tech. But for single income it’s pretty tough.
My wife is from CA and in-laws still live there. The other HUGE factor that makes living in CA difficult for a 1099 doc is the absence of a pension and retirement healthcare benefits. The CALPERS pension and healthcare retirement benefits are both lifelong and incredibly generous-and ON-TOP of the 6 figure salaries they make as State-employees in wildlife biology and CALFIRE.
With Medicare planning on further cuts to physicians to balance their budget, not yours, and further inroads by mid-level “providers,” now more than ever young physicians need to fight back in an organized way to defend a defunded profession.
I am 66 and out of the trenches, but physicians must find a way to organize and fight.
I pleaded for many years with my colleagues and my national organization to organize, but it fell on the deaf ears of my colleagues. I hope todays generation finds a way. The middle class is shrinking and shrinking along with wealth transfer to the top few. This is not a healthy state for medicine or our society as a whole.
https://time.com/5888024/50-trillion-income-inequality-america/
That wealth transfer has occurred taking physicians labors and enriching a shrinking number of insurance companies and giant medical delivery corporations at physicians economic, emotional and physical cost. The quality of mid-level providers will never be as good as that delivered by a well trained physician.
When you trade your youth and economics for years of training, it is your right to have pay commensurate with your ability to deliver quality.