Friday, November 1, 2019

Tax Havens

Various sources report President and Mrs. Trump have switched their legal residence from New York to Florida, from Trump Tower in Manhattan to his Mar-a-Lago Club in Palm Beach. It is fun to think of the huge sum this will cost New York State and City in income taxes. And the Trumps are not alone.

We have written of people - rich and not-so-rich - moving to states like Florida which have no state income tax, there are seven of these: AK, FL, NV, SD, TX, WA, WY. Two more (TN, NH) tax interest and dividend income but not earned income.

An important caveat: what matters is not state income tax alone, but the total burden of income, sales, vehicle license and property taxes. A bit of investigation located estimates of the collective tax burden for each state, found here.

As an example, OR has no sales tax but its other taxes are substantial, so it isn't thought of as a low tax haven. I know people who live in far northern CA near the OR border who cross over to make major purchases (other than cars), having it a bit of both ways. I suppose those in southern WA do the same.