Joe Rogan has hinted that he may leave California for Texas, citing high state taxes, cost of living and pandemic‑related restrictions. While a move to a “no‑income‑tax” state can reduce the state‑level burden, the federal tax picture remains unchanged and there are often more advantageous options outside the United States.
Why a simple state‑to‑state move only solves part of the problem
- California’s top income‑tax rate – 13.3 % for earnings above roughly $1 million.
- Texas – no state income tax, but federal income tax (up to 37 % for high earners), Social Security, Medicare and other federal levies still apply.
- Overall tax exposure – Even after eliminating California’s state tax, a high‑earning individual still faces a combined federal and payroll tax burden well above 30 %.
International alternatives that can cut the tax rate dramatically
| Jurisdiction | Key tax incentive | Typical effective tax rate on qualified income | Residency requirements |
|---|---|---|---|
| Puerto Rico | Act 60 (formerly Act 20/22) – 4 % tax on eligible export‑services income; 0 % on capital gains for new residents | ~4 % (plus limited federal filing) | Must be a bona‑fide resident for at least 183 days per year; annual filing of Puerto Rico tax return |
| Mexico | Various territorial tax regimes; some states offer low personal tax rates for foreign‑source income | Often <10 % on foreign‑source earnings | Minimum 183‑day physical presence; can obtain temporary or permanent residency |
| Panama | “Friendly Nations” visa; territorial tax system – only Panama‑source income taxed | 0 % on foreign‑source income | Minimum 5 years residency for citizenship; initial visa requires proof of professional activity |
| Western Europe (e.g., Portugal) | Non‑Dom regime – 10 % flat tax on foreign income for up to 10 years | 10 % on qualifying income | Must spend ≤183 days in Portugal; obtain D7 or Golden Visa |
| Other Caribbean (e.g., St. Kitts & Nevis) | Citizenship‑by‑investment; no personal income tax | 0 % | Investment of US $150 k‑$200 k; no residency requirement |
These jurisdictions can lower the effective tax rate on a $100 million contract from the mid‑30 % range to single‑digit percentages, translating into tens of millions of dollars in savings.
Practical steps for a high‑earning content creator
- Assess residency and citizenship – Determine where you can legally claim tax residency while maintaining the ability to travel to the U.S. for shows or events.
- Structure the production entity abroad – Form a corporation or LLC in the chosen jurisdiction to own the podcast’s production assets, licensing, and merchandising.
- Secure the appropriate visa – For U.S. work, an O‑1 “extraordinary ability” visa can allow short‑term stays without triggering U.S. tax residency.
- Timing matters – Implement the offshore structure before the $100 million deal is finalized to maximize tax savings.
- Maintain compliance – File the required local tax returns (e.g., Puerto Rico Form 480.6) and the U.S. Form 1040 with the appropriate foreign‑income exclusions (e.g., Form 2555 for bona‑fide residents).
Why Texas may not be the optimal choice
- Cost of living – Austin and other major Texas cities have risen sharply; housing can be comparable to California’s high‑cost markets.
- Limited tax advantage – Only state income tax is eliminated; federal taxes remain the dominant expense.
- Regulatory environment – While Texas has fewer state regulations, federal rules on foreign‑source income, self‑employment tax, and payroll obligations still apply.
Bottom line
For a creator earning a nine‑figure contract, relocating solely to a no‑state‑tax U.S. state yields modest savings. Relocating to a jurisdiction with a territorial tax system—most notably Puerto Rico’s 4 % rate—or to a foreign country offering low or zero tax on foreign‑source income can reduce the overall tax burden to single digits. The key is to establish residency and a production entity in the new location before the contract is executed, and to use appropriate visas to retain the ability to work in the United States when needed.
