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Thursday, February 18, 2016

Millennial Problems: SF Millennials Pay Highest Taxes, But Make Top Dollar

Posted By on Thu, Feb 18, 2016 at 1:05 PM

click to enlarge Checking my balance... and it's good. - FLICKR/ADAM FAGEN
  • Flickr/Adam Fagen
  • Checking my balance... and it's good.

Right around the time the latest tech-guy-notices-SF's-homeless rant was posted online and caused the predictable stir, a big-data translator was publishing a report about the other key issue facing San Francisco: millennials and their income taxes.

In both instances, nothing was too surprising, although tech bro Justin Keller is actually defending himself instead of trying to delete or walk back his post. Except there is something interesting in the tax numbers. One figure in particular might give some credence to the belief that moneyed youngsters are invading San Francisco, displacing their elders over 30, and jacking up the cost of everything.

Earlier today, the SF Business Times reported that the Smart Assets study, released Tuesday, concluded that millennials in SF pay the highest taxes of any millennials anywhere in the country. That’s not at all surprising when you consider that these folks are faced with one of the highest marginal tax rates of any state (9.3 percent in California, according to the report) on top of San Francisco’s own 1.5 percent income tax and the sticky fingers of the federal government.

But just like trips to Coachella and $15 cups of coffee, our millennials can afford it.

For our money, the best stat in all this is the median income level for millennials in San Francisco. If you’re paying higher taxes, it’s because you’re making more money than everyone else (well, almost everyone, since Arlington, VA slightly edged out SF for top median income at about $61K per year versus about $60K, according to Smart Assets).

click to enlarge Look at us. We're doing alright. - FLICKR/DAVID GOEHRING
  • Flickr/David Goehring
  • Look at us. We're doing alright.
That’s right, folks, millennials make more money than you do, have fewer bills and children, and can handle hangovers with more aplomb (for now). And their potential employers are even wont to pay off their young workers’ student loans.

But don’t burn that $4 toast just yet. Using some simple math and this handy housing calculator, the most those $60K millennials should be paying in rent is $1,500 a month. That’ll get you an SRO unit with shared bathrooms, kitchens, and needles. So they probably did not displace your grandma from the Mission.

Still, at $60K, that’s a nice little earning — especially when you’re young, single, childless, and live in one of the densest (and most beloved) restaurant and bar markets in the country. It portends well for your future earnings.

At a conservative estimate of 5 percent earning growth per year, someone making $60K in their mid- to late 20s will be making some $160K by their mid- to late 40s. Now that’s the kind of scratch that can change the social fabric of a small and dense community.

Remember, we’re only talking about the median here. It’s a figure that gets bandied about when discussing rent prices, but few people actually know what it is and how to calculate it. For starters, it’s not an average. It’s the midpoint — the point at which there is an equal probability of falling above or below the figure.

Which means for every millennial posting pictures of the good life to Instagram, there are some struggling to make ends  meet, making 40 cent toast for dinner. Just like (some of) the rest of us.
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Max DeNike

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