You know what’s nonsense? Announcing on the internet that a study is nonsense without having actually read the study :P
@2sk22 brought up a good point about how taxation might not necessarily be favorable for middle or lower income people in these retirement magnet states.
The most regressive state (Washington!), by having no income tax, needs higher taxes in other areas to support the state. This results in effectively taxing the lowest income 20% of the population at 17.8% while the richest 1% income earners effectively get taxed at 3%. And the middle 60% of earners get taxed at 10.9%. Contrast that with California that effectively taxes the poorest 20% at 10.4%, the middle 60% of earners at 8.9% and the richest 1% at 12.4%. So as long as your income is in the bottom 80% of your state, you’re paying less taxes relative to your income in California than in Washington.
Given the Mustacian emphasis on frugality, most of us are planning on living on lower than average income in retirement. So looking at what a state’s effective tax rates are for the low and middle income earners will likely be more applicable to us than what the top 1% incomes are paying.
I think you're missing the point I was making. This "study" isn't about total taxation for an individual, nor effective rates, and not even marginal rates. It's
only looking at the delta between what the highest income earners and lowest income earners have as their effective rates.
How is that a useful metric for an individual?
If that difference is 20% in one state, but I end up paying 10% effective tax, and it's 2% in another state, but I have a 20% effective tax, you know what state I'm living in? The less "equitable" one.
And it's essentially saying that's somehow "better." I live in California. It's apparently super "equitable." In fact, it's the most equitable state in their list! But all that means is that
everyone is getting screwed by the government with high tax rates. But the reality is I don't care if the rich are paying the same tax rate as I am. Awesome, we're in the same boat of getting screwed. I feel so much better now!
Equity doesn't care that California wastes all that tax income, nor does it care that I'd rather pay a lower rate even if it means the rich are paying a lower effective rate (but higher raw dollar amount).