>Low-tax states attract budget-conscious Americans | Reuters

>Low-tax states attract budget-conscious Americans | Reuters

Interesting article.

Low-Tax states mentioned: Nevada, New Hampshire, Florida, Texas, and Michigan.

High-Tax states mentioned: New York, California, New Jersey, Connecticut.

References: www.retirementliving.com & http://www.taxfoundation.com

The premise of the article is that one can save money by moving to another state and paying less in taxes. No doubt that can and does happen. But taxes are tricky economic tools, penalties – however you want to view them.

There are cigarette taxes, property taxes, investment taxes, state and local taxes, fuel taxes, retirement income taxes – all sorts of taxes. Nevada was said to be a low-tax state, but, by what measure? Nevada has one of the highest sales tax rates (6.85%). Depending on occupation, salary, and county-of-resident, the taxes paid could still be an issue. Pay less property taxes in one state, but personal property taxes and sales tax will make up for the lower property taxes.

The formula for tax-savings could therefore become very complicated.

Proponents of a national “flat-tax” focus on one aspect of a very complicated system of taxation.

Proponents of “no taxation, period” who also sometimes voice, “no taxation without representation,” and, who also voice such ideas that taxes are unconstitutional – I think that these folks tend to follow Tea Party notions – seem to think that because the Constitution does not specifically state the specific areas where taxation is acceptable that no taxation is allowable. They seem to miss the point that the Constitution is a “living document.” While many facets of government are not directly mentioned that does not mean that they cannot exist. The Constitution provides a means for government to conduct business as the government sees fit. Our duly elected members of Congress then provide the representative body required to manage the business of government.

Moving to avoid taxation is as American as Apple Pie, right? Besides religious freedom, and freedom of open discourse, freedom from unnecessary taxation was one of the motivational forces that led to Europeans moving to the New World.

On the surface, smaller taxes in neighboring states might seem attractive. Why pay property taxes of 6.8% in one state if the neighboring state has property taxes of 5.7%? Saving money on property taxes looks good on paper. That savings might be hard to calculate when the sales tax in the home state is 6% and the sales tax in the neighboring state is 9.2%. Now, which state is cheaper to live in?

The other consideration glossed over in the article are the services, the “value” you receive from the use of those tax dollars. Roads are costed, so is bridge maintenance, fire, police, E-911, garbage collection, etc.

Quantification of savings based on property value assessment from one place to another is pretty simple. Quantification of savings from other taxable entities is much different

Superficial costs and benefits are easy to see. Hidden costs, by definition, are not easy to see. Saving $13,000 in annual taxes says a lot about family size, living standards, and employment. Another family, with another means, might not have the same amount of cost savings. And, additionally, what are the trade-offs, or sacrifices?

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