n. WTSHTF: Tax Assessment for WTSHTF Retreat

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Thursday, January 19, 2012

Tax Assessment for WTSHTF Retreat

Taxes are another important consideration when choosing the state where you plan to live/retreat. Take a close look at property, income, and sales taxes before you decide where you might like to relocate. Car registration fees are another factor worth considering, especially if you have several vehicles. (In some states registration fees are a piddling administrative fee, while in some of the more populous Nanny States they are a big revenue source.)

If you are retired or nearing retirement age and middle class, property taxes will likely be more important to you than income taxes. Conversely, if you are in an upper income tax bracket or are middle class but still in your prime earnings years then income tax will be a prime concern. I've assembled some figures, gleaned from my research. Sorry that some of the following figures are a bit dated...

States with NO personal income tax include:
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Note: New Hampshire and Tennessee do tax interest and dividend income. It is also notable that Washington has a business tax of 2-3% of gross business revenues, so business owners should beware.

States with low to moderate income taxes:
Arizona and Idaho.

States with high income taxes:
California, Minnesota, New Jersey, New York, and Oregon.

States with the lowest property taxes (per capita, annually):
Alabama: $210
New Mexico: $283
Kentucky: $286
Arkansas: $321
Louisiana: $324

States with highest property taxes (per capita, annually):
New Jersey: $1,591
New Hampshire: $1,555
Connecticut: $1,500
New York: $1,329
Rhode Island: $1,233
Source: The Tax Foundation, based on Commerce Department and Census statistics.

Note: While sales and income taxes can be reduced by effective planning and clever behavior (lawfully, of course), property taxes are different. As The Sopranos mobster said: “Them you gotta pay.”

The Total Tax Burden (Property taxes, income taxes, and sales taxes combined--expressed in terms of taxes as a percentage of income:

The Best:
Alaska: 6.3%
New Hampshire: 7.6%
Tennessee: 8.3%
Colorado: 8.4%
South Dakota: 8.9%

The Worst:
Maine: 13.6%
New York: 12.9%
Wisconsin: 11.9%
Vermont: 11.7%
Hawaii: 11.6%

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