Author Topic: Anyone move to a 'no income tax' state...?  (Read 639 times)

EconDiva

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Anyone move to a 'no income tax' state...?
« on: August 12, 2017, 10:21:10 AM »
I'm just simply curious...

...is there anyone here that purposely moved to a state with no income tax, and that was one of the top 2 or 3 reasons why they picked to move there?

Absinthe Robette

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Re: Anyone move to a 'no income tax' state...?
« Reply #1 on: August 12, 2017, 10:42:56 AM »
I just moved from one no-income tax state to another.
It was one of the reasons but not the only one.
While it is an important factor in deciding where to live, I'd also consider other taxes like property and sales taxes, cost of living including housing and food and even cost of insurance . (both car and home owners/renters)
Quality of life overall is huge for me too.
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kayvent

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Re: Anyone move to a 'no income tax' state...?
« Reply #2 on: August 12, 2017, 10:49:48 AM »
If I may tack on a question, how much do you in particular save when going to a no income tax state (factoring in that other taxes may exist to offset the gain)? I just ask because I live in one of the highest taxed provinces in Canada, make about 3x my peer group's average, and only pay a few thousand in taxes.

I am curious how large your tax savings are that it is even a factor in your moving considerations.

Paul der Krake

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Re: Anyone move to a 'no income tax' state...?
« Reply #3 on: August 12, 2017, 10:59:17 AM »
If I may tack on a question, how much do you in particular save when going to a no income tax state (factoring in that other taxes may exist to offset the gain)? I just ask because I live in one of the highest taxed provinces in Canada, make about 3x my peer group's average, and only pay a few thousand in taxes.
(emphasis mine)

Well, it's rarely a fair comparison because:
1) States don't spend the same way
2) Revenue is what comes from the entire population, not just you.

Personally, I don't buy many things, drive very little, and rent a small home. The high sales, gasoline, and property taxes of Washington are completely irrelevant to my situation.

wenchsenior

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Re: Anyone move to a 'no income tax' state...?
« Reply #4 on: August 12, 2017, 11:06:53 AM »
I live in a no tax state (though it isn't why we moved here and I don't like living here in most ways).  I think it mostly matters when moving from a state with very high overall tax burdens (eg New Jersey, Oregon, etc) to a state with a lower overall tax burden (even if there is a state income tax).  We save, I think, a few thousand per year over most other states.  We save more as our income goes up, and as we keep our house and discretionary spending stable, and of course we save a lot compared with if we were living in New Jersey, Oregon, etc.

But low taxes = fewer amenities and fewer social services.  I grew up in a medium high tax state that had far nicer roads, parks, social services, public spaces, etc, than the state I live now.


And no income tax means lots of sales tax and property tax. We pay ~6K/year property tax for real estate worth 200K, and it's been going up notably almost every year.

sol

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Re: Anyone move to a 'no income tax' state...?
« Reply #5 on: August 12, 2017, 11:08:36 AM »
Every state generates tax revenue, from a variety of sources.  A high spending state and a low spending state will have very different levels of services, but might have the same income tax rate.  If you want to minimize your tax burden, you should move to a state that taxes the things you don't have.

Which is why I think it makes no sense for an early retiree to live in a no income tax state.  When you're retired, and have little to no income, that's the perfect time to live in a high income tax state, because you're not paying income tax, and all of those income taxes paid by other people should reduce the sales/gas/property taxes that you will still have to pay.

wenchsenior

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Re: Anyone move to a 'no income tax' state...?
« Reply #6 on: August 12, 2017, 11:11:28 AM »
Every state generates tax revenue, from a variety of sources.  A high spending state and a low spending state will have very different levels of services, but might have the same income tax rate.  If you want to minimize your tax burden, you should move to a state that taxes the things you don't have.

Which is why I think it makes no sense for an early retiree to live in a no income tax state.  When you're retired, and have little to no income, that's the perfect time to live in a high income tax state, because you're not paying income tax, and all of those income taxes paid by other people should reduce the sales/gas/property taxes that you will still have to pay.

Yes, I've been surprised during preliminary research how variable 'high tax burden during working years' can be versus 'high tax burden during retirement years' depending on how states tax Social Security and pensions (Hawaii comes to mind).

nick663

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Re: Anyone move to a 'no income tax' state...?
« Reply #7 on: August 12, 2017, 11:13:23 AM »
Just to add on to sol's post above, states have multiple ways to obtain income.  Income tax, property tax, sales tax, vehicle fees, personal property tax, etc.  States like Texas have no income tax but have one of the highest property tax rates and a pretty high sales tax as well.

It's important to look at everything.

Paul der Krake

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Re: Anyone move to a 'no income tax' state...?
« Reply #8 on: August 12, 2017, 11:27:43 AM »
The ultimate FIRE State is Alaska: no income tax, no statewide sales tax, fantastic outdoors, the oil dividend, and a sweetheart ACA deal that gives subsidies to households with much higher incomes than on the mainland.

Bracken_Joy

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Re: Anyone move to a 'no income tax' state...?
« Reply #9 on: August 12, 2017, 12:10:27 PM »
The ultimate FIRE State is Alaska: no income tax, no statewide sales tax, fantastic outdoors, the oil dividend, and a sweetheart ACA deal that gives subsidies to households with much higher incomes than on the mainland.

But isn't food, gas, consumer goods, all of that crazy expensive? Plus, that only holds if your family is there/you don't visit family, since flights to and from are a pretty penny too, right?
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Paul der Krake

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Re: Anyone move to a 'no income tax' state...?
« Reply #10 on: August 12, 2017, 12:17:23 PM »
The ultimate FIRE State is Alaska: no income tax, no statewide sales tax, fantastic outdoors, the oil dividend, and a sweetheart ACA deal that gives subsidies to households with much higher incomes than on the mainland.

But isn't food, gas, consumer goods, all of that crazy expensive? Plus, that only holds if your family is there/you don't visit family, since flights to and from are a pretty penny too, right?
Yup, food is more expensive, but you can fish and bulk-buy non-perishables. Gas prices are about the same as Washington, and irrelevant anyway. Not seeing family as often sounds like a win for me, but it's not that much more expensive than crossing the lower 48s.

Bracken_Joy

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Re: Anyone move to a 'no income tax' state...?
« Reply #11 on: August 12, 2017, 12:48:45 PM »
The ultimate FIRE State is Alaska: no income tax, no statewide sales tax, fantastic outdoors, the oil dividend, and a sweetheart ACA deal that gives subsidies to households with much higher incomes than on the mainland.

But isn't food, gas, consumer goods, all of that crazy expensive? Plus, that only holds if your family is there/you don't visit family, since flights to and from are a pretty penny too, right?
Yup, food is more expensive, but you can fish and bulk-buy non-perishables. Gas prices are about the same as Washington, and irrelevant anyway. Not seeing family as often sounds like a win for me, but it's not that much more expensive than crossing the lower 48s.

I know for a fact you fly *way* more than me, so I'll defer to you on that one =P
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