Top 10 Tax-Friendly Cities

Here's a list from Kiplinger of the top 10 tax friendly cities. They chose them by calculating the total local taxes owed (income, sales, real estate and car/personal property) by a dual-income couple, with one school-age child and a combined gross income of $75,000 in 2005. The list of cities and their overall tax bite:

1. Anchorage, Alaska - 4.1%
2. Cheyenne, Wyoming - 4.3%
3. Jacksonville, Florida - 4.6%
4. Las Vegas, Nevada - 5.4%
5. Honolulu, Hawaii - 5.6%
6. Memphis, Tennessee - 6.1%
7. Sioux Falls, South Dakota - 6.3%
8. Fargo, North Dakota - 6.3%
9. Houston, Texas - 6.3%
10. Billings, Montana - 6.7%

A few thoughts on these:

1. I was surprised such "garden spots" as Jacksonville and Honolulu were on the list.

2. As the piece states, this is tax burden only. Cost-of-living may still be higher in some of these places (such as Honolulu, for example.)

3. Most of the low-cost places are in less desirable areas of the country. I'm sure that has something to do with the results.

4. As the piece says, seven of the top ten cities are in states with no income tax. Makes it a lot easier to be low if your state takes no bite out of your income.

5. Also from the article: "All ten cities have an overall state and local tax burden of about one-half to three-quarters of the national median of 9.1%."

Comments

[broknowrchlatr]

I bet mine is close to the national median
3% propery
4% state income
2% local income
.5% sales

[Patrick]

I used to live in Houston. Sales tax there is roughly 7%, and TX does not have an income tax, so that makes it an even nicer place to live for tax reasons. Property taxes are a little higher than some places, but I think the lack of income tax makes up for it.

[tlange]

I lived in Jacksonville, FL for 14 years and I do not see this as a surprise because there is no State Income Tax. The cost of living is much cheaper than some places. Only negative is the crime rate... I am now living in the Minneapolis area and the cost of living is much more expensive.

[Lord]

Perhaps they should also list the top ten places a couple earning that are most likely to likely to live. It would undoubtedly be an entirely different set. Low taxes generally mean low incomes and high taxes high income though not quite as high.

[Lord]

We can apply efficient markets theory to locations and taxes. If there were better places to live with lower taxes more people would move to those areas increasing local prices and taxes until no more people would be better off there. Prices and taxes vary across the country but this is largely in accordance with local demand and desirability. As population continues to move south and west these are likely marginally more desirable.

[A Tentative Personal Finance Blog]

Darn man... I'm no where near those cities. Plus my wife wouldn't want to relocate.

[rocketc]

Lord,
Where did you get this statistic?:

"Low taxes generally mean low incomes and high taxes high income though not quite as high."

The only plausible reason for this may be the high number of retirees that tend to settle in low-tax areas.

[Lord]

It goes far deeper than that, into efficient markets. An employer must offer enough to live in a given area and make work worthwhile given the costs involved or workers will move to areas that pay better. Different areas have different costs, but they must net out or the population migrates as a result. Areas with greater opportunity grow and those with less decline. Areas less attractive for living must keep other costs lower to compete with areas more attractive. If not, they will decline, leading to lower property values and taxes. Areas more attractive will grow eventually pressuring land values and raising taxes to deal with the congestion, making them less desirable. Not everyone finds the same things desirable, but many do. Enough to make a market.

[poppypbr]

Nothing from New Hampshire...egad! No state income tax, no sales tax, no personal property tax and no auto excise tax, no local income taxes. The only tax is Real Estate Tax and although New Hampshire residents gripe about it (understandably), its no higher than Massachusetts Real Estate Taxes and we Bay Staters have all the other taxes too!

My wife and I went to the White Mountains for three days. We ran into 6 former Massachusetts residents that moved to New Hampshire and set up their own small business. Their total income was less but they paid very little of it in taxes. The quality of life was off the scale...small town Early American life like you see on calendars actually still exists in some parts of New England.
Excellent air in the White Mountains for those with respiratory problems. My wife has them and she notices the difference in just one day.

Someone needs to take another look. New Hampshire's state motto is "Don't Tread On Me". How does New Hampshire do it? Gasoline taxes (still less than Mass.) and all alcoholic beverages are sold by state run liquor stores which are also cheaper than the cheapest stores in Mass. Part-time Legislature...ta dum! Less time spent thinking up ways to increase spending and increase taxation.