What do you think of US STATES with NO INCOME TAX?

[AviatorTom]

There are 9 US states in which their residents do not pay state income tax. Of course, they pay Federal income tax, but no state tax Instead, these states rely on other taxes and fees to fund their annual budget. Some of these states (New Hampshire) do not tax wages but do tax interest and dividend income, and some of them have high property taxes.

What do you think?

Should other states eliminate state income tax and rely on other income sources? Is there anything specifically required of a state to be able to afford that, like a sizeable number of tourists or lots of profitable companies?

[WindAtMyBack]

I don't think much of it. I've worked in two of those states (Washington and Texas). However in both cases I lived in a state that DID have income tax.

It's done the same way as living in one city but working in another. The place where you work gets first dibs on taxes. If the place where you live has a higher tax, it gets the difference. When I worked in Texas, I had NO income from wages in my home state, but I still paid the full tax in my state.

There are also states with no sales tax (unless they changed). Oregon is one. When I worked in Washington, I lived near the Oregon border. No income tax in Washington, and 20 miles away there was no sales tax. For something expensive, it was worth a short drive to save some money. Washington partly dealt with this by not charging sales tax on residents from a state with no sales tax. It obviously targeted Oregon, especially Portland which is on the border. So buy something in Wa, show an Or license, and no sales tax.

Where I live now has one of the highest property taxes in the country. My property tax is higher than my friend in California whose house is worth 10X as much as mine (His low tax is largely due to Prop 13).

Personally I much prefer "use taxes". If you use it, pay the tax. This includes sales tax, gas tax, park entrance fees, etc.

Property tax sucks bad. If they ARE going to have property tax, then renters should feel the increase. People living in apartments keep voting in taxes that home owners have to pay.

[Anonymous]

It works fairly well for these states, the income tax is complex to comply with and enforce. It temps politicians to encourage sloth and drive its most productive out of the state.

A sales tax by contrast encourages savings and work. A property tax discourages hording and encourages being frugal and modest.

Its worth noting that a lot of theses states are very decentralized and the tax burden is even only high in select locations. Thus helping discourage the sinkholes of civilization that are city.

[CrazyGirl2]

As a person who happens to live in one of those states, and for obvious reasons, I'm absolutely thrilled that we do not have a state, income tax! I think a lot of states, especially those that have lost many of their higher income earners to low, and no state income tax states like Florida, Tennessee, and Texas, et al. may be forced to adopt a no state income tax model. Florida’s general state sales tax rate is 6%, with counties being allowed to hold votes to increase that for county needs. For example where I am now, the sales tax is 7.5%, however the sales tax where my parents live is 6.5%.
I think I LOVE states with no income tax. If I lived in a State WITH a sales tax, (again for obvious reasons) I would move! A ONE percent difference in tax could save me tens of thousands per year. So I love living in a state with no income tax.

Laura. 🤗 🥰

[CrazyGirl2]

***Correction*** “If I lived in a state with an INCOME tax...

[purplepoppy]

I don't understand the American tax system it seems awfully complex compared to the UK. On the surface it sounds good but I suspect they'll take their pound of flesh one way or another.

[BetaBucks]

We have a dozen different types of taxes that total up to being the same, or more, than many European countries. But it somehow makes our citizens feel better about it. Also, most places have five different government levels. Federal, state, county, city, and district (schools, utilities, etc...). We have to pay for each level. It isn't cheap...

[monorprise]

@purplepoppy
We have a federal system of goverment so each goverment collects its own taxes in its own way.

It would be nice if Washington would simply let the state collect Federal Taxes for them like they did under the Articles of Confederation to the State choose how we pay. But federal politicians would rather pick on individuals than their states to extort more money from.

Which is why the Federal IRS can be very abusive, their victims defenseless and politically insignificant. A big reason why its income taxes that are soo troublesome.

Sales taxes are charged automatically at point of sale and listed on the receipt, you don't notice it if you don't look. (if you think they are high compare American prices to your own). Property taxes are usually mailed to you same as utilities.

@BetaBucks From what I've heard of European Taxes a very large % of them are basically invisible to most Europeans. Judging by the cost of stuff in Europe I don't think it is at all reasonable to say they pay less taxes than we do.

[purplepoppy]

Interesting. In the UK most peoples taxes are taken straight from their wages each payday, no filling out your taxes. But you've also got a local council tax on top of that. The tax on stuff you buy is already incorporated into the price so it's hidden.

[monorprise]

@purplepoppy
Yes I have heard that Europeans have a VAT tax where they tax not only at point of sale but many other points along the way.
Making European taxes very non-transparent to the European people.

Here they have to tell you how much they charge you in sales taxes otherwise politicians would just raise the rate and blame it on greedy companies when it was really them who was greedy.

In the federal case and every state i've ever lived with an income tax, they are also collected straight form your wages each pay check.

The complicated bit is the Governments wants to implement a progressive taxation system to include every other source of "income" and their "deductions" and "Credits" to encourage you to do what politicians want. Although that is mostly just wealthy people now post trump Tax cut very high standard deductible.

I think its unlikely many states would retain an income tax system if the feds didn't run one given its complexity and cost. The ones that do tend to mirror the Federal income tax rules for the most part piggybacking on the same information for validation.

Its just too much trouble to figure out if your telling the goverment the truth. Which is why the income tax system with all said deductions and rules is really difficult to enforce, but the means to do so gives you all kinds of detailed information on every citizen.

Perhaps the main reason people don't like the income tax system.

[NaultD]

I'm in Alaska, and it's already one of the most expensive states to live in logistically. So, there are zero billionaires making money, but the highest count of millionaires in Alaska are maxing out and relaxing. They're also not making money. I'm curious if that will hurt us in the long run.

I just remember executives coming to my place of work and saying, "I love Alaska, but it's too expensive." I'm thinking to myself, "You make 50 times my paycheck." and I was born here, forced to live here until I could save 50 times my normal pay to move.

[Static_In_The_Attic]

Taxing the workers isn’t the way to go especially hard working individuals. As for states without income tax I applaud those states however those states are going to tax you in other areas. I think people should pay more tax at the pump. I think people should pay more tax for food. I think people should pay more in sales & property tax as well.
As for senior citizens, disabled veterans, veterans as well & citizens that are disabled there should be discounts especially in their golden years. In addition if you are not a citizen of this country you should be taxed more if you don’t have the proper documentation to be in this country legally.

[exitseven]

Every state needs money to provide services to the people that live there. Different states have different ways of raising that money. They have different circumstances that enable them to raise money in novel ways. New Hampshire has a big tourism industry so they tax the out of state people that go skiing and snowmobiling in the winter and boating and fishing in the summer.

What is more important is how efficiently the states use that money. You look at states like California that has high taxes across the board and yet has the highest deficit in the nation as opposed to Florida that has no income tax and low property taxes yet had the largest budget surplus in America.

[msc545]

Nope. California has a very low property tax that cannot by law be raised.

[exitseven]

@msc545 We have a similar law here but property taxes are still expensive.

[msc545]

How is property tax calculated there? Here in CA, it is 1.50% of the most recent purchase price.

[exitseven]

@msc545
Each town hires an assessor to determine the value of every house in town. There is a calculation that determines how much per thousand the tax rate will be depending on what the annual budget will be.
The total budget cannot be raised more than 2 and a half percent per year without the town voting for an override. I cannot imagine what it would be if we did not have that. In this state we have a state income tax, high property taxes, sales tax, and all kinds of fees.

[msc545]

Wow! Letting a human being decide the amount of taxes seems to me to be an absolute recipe for corruption.

[exitseven]

@msc545 We just had an override vout two weeks ago. The state is broke because they spend a billion dollars a year on illegal aliens ad so many people have left the state for more citizen friendly states that there was a revenue shortfall of another billion. The money that usually gets given back to the cities and towns was canceled this year so the towns all came up short. Most places Atmore voting on overrides. In my town if the override passed it would have added $1300 to my annual tax bill. This is not for just one year. It is forever. It was soundly defeated. The town government will have rmto learn to do with less just like the rest of us

[msc545]

Ouch!!!

[exitseven]

@msc545 yes, ouch.

[SotiCoto]

I don't really get the difference between "federal" and "state" ... but if they're paying something that has "income tax" in the name then it is false to claim they have "NO INCOME TAX".

[AviatorTom]

@SotiCoto In the US, everyone pays an income tax to the Federal (i. e-country) government in Washington DC. That money is used to fund the Federal government, although some of it is given to the individual states. Each of the 50 YS states also has its own government, and most of that government is funded by a state income tax, as well as other taxes and fees, typically a sales tax (like UKs' VAT), real estate/property taxes and fees on hotel rooms and corporate profits.

[strateguy632]

to @SotiCoto he SAID "do not pay state income tax" he never claimed what you whined about it!

[SotiCoto]

@strateguy632 : Read the title question again, idiot.

[Avicenna]

There are different ways to fund state governments, but it's usually impossible to have all taxes low. It might be best to have a low corporate tax and low capital gains tax than no state income tax.

[strateguy632]

i wish my state new york would shift the taxes to food, then EVERYONE would pay even people without jobs and non-citizen. my money instead of state tax would go to the sales tax... i would probably pay LESS total despite raised sales tax to compensate.

[normalice]

Tax laws need to be completely rewritten every 50 years or so, in my opinion, to negate all the loopholes rich people will have carved out for themselves.

[hahahmm]

Easier to just reduce the size of government to the point where it has no excuse to collect most taxes.

[monorprise]

@normalice
Go back to a system where states collect all taxes again. On the way we pay taxes and someone independent to appeal to in cases of unequal application of the tax law.

Then tax laws can be revised constantly and we can see the results as well as vote among them with our feet.

The 'federalist' may have declared the idea 'failed' after only the first 6 years of the Articles of Confederation 1781-1787 in which northern states had trouble repaying the war dept.

But they didn't even propose alternative less power hungry options like Federal tax only if State fails to pay. Instead they ignored the narrow convention mandate of only amending the Articles of Confederation for a tax power and wrote an entirely new more powerful Constitution for themselfs.

Power hungry anyone?

Lets try it again, the Anti-federalist made better predictions about most everything else why wouldn't they be right about this as well.

The people at the time certainly thought so in basically abandoning the federalist party within a decade.

[normalice]

@hahahmm easier for the wealthy to create another feudal area, you mean

[hahahmm]

@normalice No.

[normalice]

Oh, yes you probably didn't mean it, but in fact we're just unaware of the consequences of your idealism..

[hahahmm]

@nomalice Or you just like arguing with people.. so of course you winding taxes back 50 years is good & me winding taxes back 100 years is bad. Okay.

[normalice]

Or the whole point of the united states was to stop having a feudal country. And as a country, this is the solution we stumbled our way onto. But now the rich people who want feudalism back have convinced you that it would be "edgy" or whatever to undo it all.

[BCRanger10]

I think it should be done away with across the board.

[captain_voidwalker]

Well sin e I live in Texas I can definitely say no income tax is great. Yeah you do find slightly higher prices do to various sales taxes and fees but this means you also can more or less choose what gets funding based on your spending habits.

[Anonymous]

honestly, it doesn't matter. because they will tax you somewhere else or raise prices of something else to make up for it. like, high car insurance.

[ArrowheadSW]

They've got to get their income in some way.

[ChinaGrove]

Idaho has a state income tax, and an extremely low sales tax. So people from bordering states flock there to buy stuff. It's good for their economy.

[Twalli]

If we remove income tax, other taxes increase and people throw fits, even though their taxes haven't really been changed

[msc545]

With the exceptions of Washington, New Hampshire, and Alaska, all are flyover states.

[dolemite58]

I’m a resident in one of them so I think it’s great lol

[Kaylei2006]

WELL, the rest of the world would go hungry to start, smh

[Kaylei2006]

Didn't see 'States'

[OfMiceandMen]

I think - it must be nice.

[Theodoricus]

The US is no need taxes. Because the US still exploiting sources of the Middle East.

[loves2learn]

Seems like I might be living in the wrong state…

[Snakeyes7]

They take it from you in other ways but it is based either way.

[KostasKouvalis]

I command them for their decency

[Awesomesauce2005]

We should have no taxes. Cjange my mind.

[strateguy632]

easy... family guy Season: 10 Episode: 21 in an entertaining way just for you.
https://familyguy.fandom.com/wiki/Tea_Peter