Your state tax burden depends on whether you are poor, in the middle, or rich.
In general, the rich pay a smaller portion of their income.
Here's a surprise. Notwithstanding their reputations, California and New York are not the high tax states for the average person. They are only high tax for their wealthiest citizens.
Texas and Florida are not the low tax states they are reputed to be. They are low-tax for the very richest citizens, but they are are high tax states for the average citizen.
The chart below is the one that shapes most people's thinking about high and low tax states. New York, California, and my home state of Oregon are there on the left. Texas and Florida are presumed to be low tax states. No wonder Elon Musk moved to Texas. There's no income tax there.
The chart below is for the second quintile in income distribution. middle and upper-middle class people. These are "normal," financially comfortable people, frequently two-income families with mid-level jobs and homes in middle-income neighborhoods.
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| Charts by Kevin Drum's excellent website |
New York and California slip down and the "low-tax" states move up.
Some taxes, like a progressive income tax, are highly visible collections of money at the source, earned income. The richest do, indeed, pay more.
Some states rely on other ways of collecting money. Sales taxes collect a higher percentage of income from poorer people. Lower quintile earners spend their money in places where sales taxes are collected. Wealthy people tend not to spend all their income, or they spend their money in places that aren't taxed, for example on foreign vacations, private school tuitions, household and landscape services, etc. Car registrations, tolls, and gasoline taxes collect nearly as much from people who make $15/hour as they do from multi-millionaires.
States and localities sometimes pay for general common-good services such as storm drains, parks, and police by making them flat fees attached to a water bill or other utility. A person with a small starter-home pays the same as the person with a mansion. Some states charge hefty fees for annual licenses to do low-income jobs, including barbers, nail technicians, and landscape workers. In Oregon, hourly laborers working in marijuana gardens are especially hard hit with annual registration fees.
Property taxes based on assessed value have a surface appeal of fairness. The bigger the house, the higher the tax. In reality, it taxes bottom-quintiles a higher percentage of their income. A middle-income couple's home frequently constitutes by far their biggest asset. A two-income family making a total of $80,000 to $100,000 a year might own a median-value home valued at $400,000. It might pay property taxes totaling 2.5% of its value in a high-property-tax state, $10,000. A top 1% earner making $800,000 to $1,000,000 a year, ten times as much, likely has a bigger, nicer home, but is unlikely to have a home costing $4 million, the same five-times their annual income. They will pay property taxes to support overall state services, but at a far smaller share of their income.
I invite readers to look up their state in the chart below, drawn from the Institute on Taxation and Economic Policy States are listed in the order of the index of inequality of tax treatment between income groups. Florida is first. In Florida, for example, the top 1% pays 2.7% of their income in state taxes, while the poorest 20% of Floridians pay 13.2% in state taxes.
Oregon readers will see that Oregon, with it highly visible nearly flat 10% income tax, plus an inheritance tax on estates over $1 million, has a very even burden across the board, and therefore a low index number. Prosperous Oregonians may not like it, but it works out to be about an equal proportion of incomes up and down the income scale.
12 comments:
I would expect a reader in Florida to be reminding us of how superior that state is to Oregon, but he might be busy sandbagging against the rising tide. It’s a good thing their governor believes climate change is a hoax – otherwise they’d really be in trouble.
Facts, yikes!!
I moved to Florida 9 years ago. I love it there. The highest tax there is the property tax. However, I was able to be qualified for the Homestead Exemption Act, so I only pay $4000/yr on the property plus no property tax on my car. It has no income tax on my earnings either, so that's a nice perk. Gas tax, sales tax, road tolls, etc. only count when I use them. There's a couple of months a year I have to escape the heat and a hurricane or two, but other than that, living is easy.
Well, I must admit when leaving Alaska and returning to the Pacific Northwest, Oregon’s taxes made Washington seem much cheaper. With a 100k income, it felt like 10 k going to taxes versus piece meal sales tax, Washington was much cheaper. As a result, I live in Washington and now prefer the weather here. I am of an age that thinks Medford is too hot. Sorry Oregonians.
A word from the other Ex-Oregonian about taxes. I paid a lot of taxes in Oregon.
1. The estate tax threshold is considerably higher in Florida than Oregon.
2. My Florida property taxes are about half what they were in Oregon's Washington County
3. My elevation is 75 ft above sea level. 5 feet down below ground level is limestone which means at some point in history my area was deep in the ocean. Yes, it may return under the sea in the future but not anytime soon.
4. We have sales tax holidays twice a year. Once in late May/early June for storm preparation supplies. Repeated again late July/early August for school supplies.
5. There is no sales tax on food.
6. Our gasoline cost is typically lower than Oregon by a lot. gas uddy.com and AAA will report on various areas.
7. Yes, for some, Florida is expensive, but it would be even less affordable for them in Oregon.
8. Last year, net increase in population for Florida was almost 1,000 per day. Last time I checked, Oregon was losing residents.
9. When we moved to Florida almost 5 years ago, we stopped in the local county offices to change our car registration and get new drivers licenses. The plates and a REAL ID drivers license were provided to us in about 25 minutes. The drivers license was good for 8 years, and it notes Veteran status. Did not have to wait for delivery a few weeks later, and the DMV wait was about 5 minutes. No appointment necessary.
10. My auto insurance and homeowners insurance rates are lower than what I paid in Oregon.
11. I do my own taxes, and have done so since the 70s when I moved to Oregon to start my high tech career. Oregon has a very high income tax, made higher by limiting deductions for federal taxes paid. I've been converting my IRAs to ROTH IRAs so my future withdrawals will be free of federal taxes. I only have to pay federal income taxes and no state income taxes on those conversions. If I were still in Oregon, the state would be taking a big chunk, too.
For my sunset years, we travel. We are in Nova Scotia today. Next stop, Prince Edward Island. I don't mind paying the sales tax on my spending here. Only a 15% VAT, yet the prices turned out to be a bit less for the same items just across the border in the US
After my wife and I retired, we looked into where we might want to move. Medford’s summers had gotten too hot and smoky. The problem is that we still like to cross-country ski and love the mountains and we also love the wild and scenic Oregon coast. I do believe it may be the only state where there’s no such thing as a private beach. Medford is close to both, has good healthcare, shopping and isn’t a big city. We’ve both lived briefly in Florida long ago when it was more livable and we disliked it then. If we did decide to move, it wouldn’t even be on our list. We would hardly be considered wealthy, but don’t consider our taxes to be a burden. And we’re happy to have folks leave here and move to Florida. It already has over five times the population of Oregon. No place is perfect, but for those who like seasons, Florida is about as imperfect as it gets.
I think the common perception is that Oregon taxes are higher, because we see them in larger chunks. I am always glad to return here after being out of state, because when I get to the cash register the price of the item in Oregon is all I pay. Other states collect much of their revenue by nickel-and-diming every purchase. This is grossly unfair to younger people; when you're first starting out you have to buy more stuff. I am at a point in life where I don't need to make a large number of purchases, and I'm guessing many of your readers are in a similar, less-affected age or income status. So please, even though we got self-serve gas, don't bring the sales tax here!
Florida is an endless Summer, with the exception of January where it gets all the way down to 50F !
Except for the occasional Blue Northern which sweeps down, freezes the orange crops, which then causes them to go crying to Washington for Federal Aid, as they do when hurricanes hit.
State Taxes are but one source of funding when it comes to running a state. There are property taxes, income taxes in some states, sales taxes, federal funds and various other fees and taxes that are used to fill state coffers. There is quite a bit of funding from the federal government that finds their way into a state's treasury.
In the past, I discovered a website, Ballotpedia that provides a different look into what it takes to run a state's government and programs.
All sources of state revenue from local and federal sources divided by the number of residents, one gets a cost per resident to run the state:
State Spending - Cost per Capita
The figures from 2017 indicate that Oregon spends a lot per capita, the 4th highest in the US, while my Florida spends the least per capita.
For some reason, I find everything I need here is Florida. Some may say that the public suffers, yet the public keeps increasing. Our public schools are doing well. Our roads are great. We are attractive enough that more people are choosing Florida to reside in than are leaving. Business is booming, too. Oh, and tourists come here too, contributing even more to state coffers.
Florida is not for everyone, but it is very greay for my wife and me.
Just another statistic to look at from a government efficiency standpoint. Yes, it costs a lot to run some states, and the quest for more funds is ever increasing.
Hopefully somewhere there is another website that show effective use of tax dollars.
Perhaps Oregon spends too much, or needs to increase the population to bring that number down. The median is considerably less than what Oregon spends per capita.
All of these comments talk about money, but little mention about getting what you pay for.
The conservatives can have FL and its government controlling their lives. Maybe the Eastern Oregon whiners can move there.
I'll take Oregon every day of the week.
Oregon had been very good to me and my wife. We lived there for almost 45 years. It made us what we are today. A successful tech career. A successful, active, and healthy family.
Both my wife and I had a successful tech career, but...
Starting in 2010, we felt that our above average tax dollars were being wasted. Even worse, the state and the country wanted even more.
I was a very active school volunteer who was PTA president for several years in the Beaverton School District. Friends wanted me to run for the school board, but I chose to work behind the scenes and got 3 new board members elected. They ousted incumbents. I led the "math wars" in 2006 to restore traditional math in Beaverton's high schools. Yes, they wanted to eliminate traditional math. You can read all about it in The Oregonian archives.
When it came down to planning for retirement, we learned that there were better places to retire, and that we could visit Oregon whenever we wanted, for considerably less than actually living there.
We do travel quite a bit, and considered several locales for our sunset years. We viewed the Oregon decline as a negative. There never seemed to be enough tax revenue to keep Salem and Washington County funded enough to get the job done.
We considered several states - Nevada, Washington, Tennessee, Arizona, North and South Carolina, and Georgia. All closer to family. All with good universities and colleges, and all with a less Progressive stand.
We did not like seeing our taxes used ineffectively nor inefficiently. We wanted to see good schools for children in K-12, too. Good preparation for the next generations who will be business and public employees.
We remember Oregon for what it once was. Not what is has become.
Others have left too.
For those who remain, let's hope Oregon turns around for the better.
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