How is real estate cash flow/passive income taxed?

[Bryan Tasumi]

How is real estate cash flow/passive income taxed? Is it better to live in a state with income tax (e.g. California) or a state with high property tax (e.g. Texas) to minimize taxes on the passive income/cash flow generated from rental properties? How can I do this quantitative analysis when choosing which states to invest in? 

What states have the best tax laws for investors to optimize the amount they get to keep with real estate investing? What states have the worst tax laws that investors should try to stay away from? 

I want a way to compare apples to apples properties in different states with regard to the tax differences to see which state would allow me to keep most of the passive income/cash flow. Is there a way to do this? Has anyone done this comparison/analysis before?

Thank you!

[Greg Scott]

Bryan:

As a former Californian, I can tell you that you live in what is probably the very worst state to be a real estate investor.  You are taxed higher in almost every way, it is landlord hostile, and the costs to manage your LLCs are astronomical.   Just about anywhere you could go would be better than where you are!