Is it better to live in a state with no income tax? It’s a great question to ask, especially when considering how much of our paycheck is already set aside for Uncle Sam. Seven U.S. states forgo individual income taxes as of 2018: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Residents of New Hampshire and Tennessee are also spared from handing over an extra chunk of their paycheck, though they do pay tax on dividends and income from investments. The main benefit of eliminating the individual income tax, proponents say, is that states with no income tax on residents become beacons for growth. They’re better at creating jobs and keeping a core of young, educated workers from moving to other states. The American Legislative Exchange Council reports that over the past decade the nine states without a personal income tax have consistently outperformed the nine states with the highest taxes on personal income in job creation, population growth and even tax revenues. Others, however, are skeptical about those findings. “There is no compelling evidence that states without income taxes are outperforming states that have them or even have relatively high rates,” says Michael Mazerov, senior fellow at the Center on Budget and Policy Priorities. “The research shows that the overwhelming driver of where people choose to live and where people choose to move is job opportunities and family reasons, and state and local taxes are pretty negligible for most households,” Mazerov says. The issue is undoubtedly controversial. Public… [Read full story]
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