state income tax

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Edge215
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state income tax

Post by Edge215 » Fri Feb 14, 2020 1:26 pm

what kind of tradeoffs do states without income tax make? schools? or do they make up the lost income somewhere else?

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Kenkat
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Location: Cincinnati, OH

Re: state income tax

Post by Kenkat » Fri Feb 14, 2020 1:28 pm

Sales taxes, personal property taxes, higher real estate taxes, etc.

You’re gonna pay, it’s just a question of how and how much.

RubyTuesday
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Joined: Fri Oct 19, 2012 11:24 am

Re: state income tax

Post by RubyTuesday » Fri Feb 14, 2020 1:31 pm

Edge215 wrote:
Fri Feb 14, 2020 1:26 pm
what kind of tradeoffs do states without income tax make? schools? or do they make up the lost income somewhere else?
States without income tax do one of the following:
- have higher than average total sales tax
- have higher than average property taxes
- provide lower than average services (schools, roads, prisons, Medicaid, etc)
“Doing nothing is better than being busy doing nothing.” – Lao Tzu

RubyTuesday
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Re: state income tax

Post by RubyTuesday » Fri Feb 14, 2020 1:32 pm

RubyTuesday wrote:
Fri Feb 14, 2020 1:31 pm
Edge215 wrote:
Fri Feb 14, 2020 1:26 pm
what kind of tradeoffs do states without income tax make? schools? or do they make up the lost income somewhere else?
States without income tax do one of the following:
- have higher than average total sales tax
- have higher than average property taxes
- provide lower than average services (schools, roads, prisons, Medicaid, etc)
Oh, and some I guess have large revenues from natural resources.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu

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btq96r
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Re: state income tax

Post by btq96r » Fri Feb 14, 2020 1:39 pm

In Tennessee, they close the gap with sales tax. State rate is 7% (groceries get knocked down to 5%), plus whatever the county adds on top of it. For me in Nashville, that comes out to 9.25%.

Hefty, yes...but with no income tax, and the capital gains tax being gone after this year (was 5%, a law chipped down 1% per year until 0% hits), I get to keep a lot of my income to spend or invest as I see fit. That said, the sales tax is going to be a junk punch when I eventually need a new vehicle.
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EddyB
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Re: state income tax

Post by EddyB » Fri Feb 14, 2020 1:40 pm

Kenkat wrote:
Fri Feb 14, 2020 1:28 pm
Sales taxes, personal property taxes, higher real estate taxes, etc.

You’re gonna pay, it’s just a question of how and how much.
While true in an absolute sense, in a meaningful relative sense, someone's gonna pay, and that may be more you in some states than in others.

sarabayo
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Joined: Fri Jun 29, 2018 6:59 pm

Re: state income tax

Post by sarabayo » Fri Feb 14, 2020 1:54 pm

EddyB wrote:
Fri Feb 14, 2020 1:40 pm
Kenkat wrote:
Fri Feb 14, 2020 1:28 pm
Sales taxes, personal property taxes, higher real estate taxes, etc.

You’re gonna pay, it’s just a question of how and how much.
While true in an absolute sense, in a meaningful relative sense, someone's gonna pay, and that may be more you in some states than in others.
Right, the states which get more revenue from sales tax than income tax are basically incentivizing people to save and not spend their income, which is likely something you're already doing if you're a Boglehead. (It's also something people with high incomes tend to be more able to do, of course, so it also benefits them generally.)

NJdad6
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Re: state income tax

Post by NJdad6 » Fri Feb 14, 2020 3:06 pm

RubyTuesday wrote:
Fri Feb 14, 2020 1:32 pm
RubyTuesday wrote:
Fri Feb 14, 2020 1:31 pm
Edge215 wrote:
Fri Feb 14, 2020 1:26 pm
what kind of tradeoffs do states without income tax make? schools? or do they make up the lost income somewhere else?
States without income tax do one of the following:
- have higher than average total sales tax
- have higher than average property taxes
- provide lower than average services (schools, roads, prisons, Medicaid, etc)
Oh, and some I guess have large revenues from natural resources.
True to an extent. Some states have high taxes/property taxes due to poor management and high expenses. States with lower costs may have comparable services. I have found that many of the services (schools, roads, etc.) tend to be more local based rather than state. For example, NJ has some of the highest rated schools in the country but not all schools are good. I’m sure you can also find great schools in states with overall low ratings for education.

States like NJ have incurred huge debt and underfunded pensions. Much of the high taxes are not going to services (take NJ Transit for example). They are going toward paying down debt. Sounds like Illinois is in a similar situation.

gr7070
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Joined: Fri Oct 28, 2011 10:39 am

Re: state income tax

Post by gr7070 » Fri Feb 14, 2020 3:10 pm

Kenkat wrote:
Fri Feb 14, 2020 1:28 pm
Sales taxes, personal property taxes, higher real estate taxes, etc.

You’re gonna pay, it’s just a question of how and how much.
This!

The one thing I really like about no state income is that gives me some (if only a little) choice in how much taxes I pay.

Teague
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Joined: Wed Nov 04, 2015 6:15 pm

Re: state income tax

Post by Teague » Fri Feb 14, 2020 3:11 pm

RubyTuesday wrote:
Fri Feb 14, 2020 1:32 pm
RubyTuesday wrote:
Fri Feb 14, 2020 1:31 pm
Edge215 wrote:
Fri Feb 14, 2020 1:26 pm
what kind of tradeoffs do states without income tax make? schools? or do they make up the lost income somewhere else?
States without income tax do one of the following:
- have higher than average total sales tax
- have higher than average property taxes
- provide lower than average services (schools, roads, prisons, Medicaid, etc)
Oh, and some I guess have large revenues from natural resources.
Like casinos.
Semper Augustus

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LadyGeek
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Re: state income tax

Post by LadyGeek » Fri Feb 14, 2020 3:24 pm

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