As graduation steadily approaches, stress levels of SMU seniors correspondingly rise. Résumés are perfected, neatly packaged and sent with care to companies and organizations around the world, and seniors are faced with a seeming surplus of decisions to be made about their futures. Atop this long, long list is a looming question of geography.
SMU’s Office of Undergraduate Admissions reveals California to be the No. 1 feeder state of out-of-state students into the school. And according to a 2011 Pew Research Study, many students find comfort in moving back to their old stomping grounds after graduation, as nearly one-third of college graduates move home after receiving their diploma.
“Moving back to L.A. after graduation only seemed logical,” said Rachel Hayes, SMU alumna of 2012. “All of my friends and family are here.”
While Hayes was prepared for the change of environment and lifestyle, she was not prepared for the expenses that accompanied her move. Hayes, who began financially supporting herself in college, noticed a drastic increase in living expenses in Los Angeles as compared to Dallas.
“My salary here is much higher than it was in Dallas, but I blow through money here,” Hayes said. “Not to mention I don’t go out nearly as much [as I did in Dallas]. At first I didn’t get it.”
Hayes came to learn that local and state taxes were the culprit of her waning bank account. According to an analysis done by 24/7 Wall Street, California is ranked fourth in the top 10 states with the highest tax burden. Texas, on the other hand, is ranked fourth in the top 10 stated with the lowest.
In 2010, Americans paid, on average, 9.9 percent of their income for state and local taxes. Californians currently pay 11.2 percent of their income for state and local taxes, a notable increase from the national average. Texans pay less than 8 percent of their income for state and local taxes, and have since 1996. In fact, Texas is one of seven states that do not require individuals to pay an income tax at all.
Like Hayes, Drew Johnson moved to L.A. post-graduation. Johnson, who was offered a $75,000 salary for his job with a commercial real estate firm, expected to put much of his pay in his savings account. But local and state taxes shrunk his budget more than he expected.
“I will be taxed on nearly 30 percent of my income this year including federal, state and local taxes,” said Johnson. “California’s state sales and income tax are much higher than they were when I lived in Dallas. My rent, food, gas [and other general living expenses] are much more expensive than they were last year [in Dallas].”
According to BankRate.com, someone moving from Dallas to L.A. would need a 36% salary increase to maintain the same cost of living.To make up for this deficit, Johnson recommends finding an inexpensive area to live in.
“Venice Beach and Downtown L.A. are both affordable and up-and-coming neighborhoods that are great for kids in their twenties,” said Cara Sands, a real estate agent in Los Angeles. “You can get a big place for a bargain in these areas.”
