Is It Better To Live In A State With No Income Tax?
State income tax
State income tax is imposed at a fixed rate on taxable incomes of individuals, corporations and certain estates. Most individual US States collect state income tax along with the federal income tax. They are separate entities by the way. The largest source of federal revenue is the individual income tax. It has been increasing since the 1940s. But not all states have income taxes, Forty three states imposes individual state income tax but nine other states do not. The income taxes of these states vary widely from one another. Each state, including those with no income tax, has a state taxing authority with power to assess and audit returns filed.
No Income Tax State
There are seven states with no state individual Income tax. The other two are state taxing only dividend and interest income which makes it nine. An evaluation of these seven states is found here on their official website. But do the no income tax states are better than those who impose?
States with income taxes have people migrating and even businesses and corporations transferring to low income tax states. Although people might think that having no state incomes makes you pay less. Unfortunately, some states make it up from other taxes because these states need revenue to function. The costs of other taxes like property tax, sales tax, fuel tax, etc. could still amount higher overall taxes than states with no incomes.
Arizona, collects a bracket of 2.87-5.04% of personal tax. However,state transaction privilege tax, county and municipal sales taxes are also being collected. Although Arizona has been consistently one of the lowest property taxes by counties and ranks as one of the highest recipients of wealth and migration because of its progressive friendly tax climate. It still is collecting a high amount of tax based on the census data of the Tax Foundation.
In an article from Google News, Arizona is in its best position to remove income tax. Arizona can eliminate the personal income tax without raising its other taxes since it can fund itself from other taxes imposed. In the article, it is stated that growth is a huge potential if income tax is eliminated. His could attract a lot of taxpaying people and businesses from other states. For more info about the article, please click here.