One of the best things about living in the United States is the high degree of mobility Americans have in moving from one state to another. You move, stand in line for half a day to get a new drivers license, lose another half a day updating your vehicle registration, update your auto insurance, stop filing your old state income tax, and start filing your new state income tax. Some states are avante-garde’ enough to not even levy income tax. Comparatively speaking, this is a painless process.
Most of us move for work, school, family, adventure (when we are young) , or retirement (when we are not so young). There is, however, one more great reason to move, and it’s one of which most Americans are unaware.
The Small Business and Entrepreneurship Council recently conducted an exhaustive review of tax laws in all 50 U.S. states and the District of Columbia. The Business Tax Index 2010: Best to Worst Tax Systems for Entrepreneurship and Small Business offers both a quick-glance color graphic of where each state ranks and an in-depth fifteen page PDF report documenting how they arrived at the rankings.
The top ten best state tax systems are: 1) South Dakota, 2) Texas, 3) Nevada, 4) Wyoming, 5)
Washington, 6) Florida, 7) Alabama, 8)Alaska, 9) Ohio, and 10) Colorado. The ten worst state tax systems are: 42) Massachusetts, 43) Oregon, 44) Vermont, 45) Iowa, 46) Maine, 47) New
York, 48) California, 49) Minnesota, 50) New Jersey, and 51) District of Columbia.
If you live in one of the worst states, now may be a good time to start planning your relocation to one of the best states. Even if you aren’t a small business owner yourself, the presence of entrepreneurs and small business owners helps to insure that you are able to purchase quality goods and services at affordable prices. When small business is suppressed by government regulation, large business loses the need to operate competitively.
As an individual, you might focus on the states which do not levy a personal income tax on their residents: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. There seems to be a state for every taste in that list.
If you are an investor, you may be interested in the states which do not levy a capital gains tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Making the decision to move to a new state can have the same economic impact as receiving a 20% pay raise — based upon taxes alone. In addition, states which do not burden their businesses with high tax rates also tend to be less expensive to live in — because businesses are not passing those costs on to consumers. You will find that locales with low tax rates usually also feature low prices on almost everything you purchase.