The Best (And Worst) States To Avoid Income Taxes

As Tax Day (April 18th) looms, we are once again reminded of how deeply the government reaches into our pockets. However, as Bloomberg details, there is one way to reduce your income tax burden – Switch states. Federal tax rates are the same no matter where you live, but state income taxes are all over the place.

Some have progressive tax systems, where top earners pay a higher marginal rate on their taxable income than those who make less.

Eight states have a flat tax, applying the same percentage levy across all incomes.

Three states actually have regressive income taxes, where the mega-wealthy pay a lower percentage of their taxable income than those in the middle.

And nine states have no income tax at all.

See how your state stacks up.

This chart lets you compare the effective state tax rates of a household earning the U.S. median of $36,841 in adjusted gross income with a household earning $1,860,848, just enough to enter the top 0.1%.

Source: Bloomberg

 

Finally, as we noted previously, if you hate taxes, you are far from alone.  According to NBC News, here are some of the things that Americans would rather do than pay taxes…

Six percent would rather sell a kidney, eight percent would rather name their first-born “Taxes,” and 11 percent would rather spend three years cleaning the bathrooms at noro-torious Chipotle.

Of course our system was never intended to be like this anyway.  Our founders hated taxes, and they fought a very bitter war to escape the yoke of oppressive taxation.  During his very first inaugural address, Thomas Jefferson clearly expressed what he thought about taxes…

A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.

Why couldn’t we have listened to him?

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About the Author: Tyler Durden

  • GALT

    The founders did not face “oppressive” taxation, nor
    did they engage in revolution because of it. ( we would
    be thrilled with that level of taxation….but all you have to do
    is find and post the actual rates…and you could resist making
    stupid statements, in order to make and irrelevant point….or
    quote Thomas Jefferson. ) But while your here, you should know
    why the revolution was REALLY fought.

    When the British won the seven years war in 1763, they solidified
    control of North America…..which thwarted the “ambitions” of
    colonists in a number of endeavours. In this mythology, these
    people are quaintly described as “farmers and merchants”,
    but the former were slave owners, with the exception of
    Massachusetts……and the latter were “smugglers and land
    speculators”……with the ‘smuggler’s dealing , also in slaves,
    molasses, tea and other imports….not from Britain, while
    exporting rum, raw materials, etc and seeking better markets
    other than Britain, in what is referred to as the Triangular Trade.

    Both the Gaspee Incident and the Somersett Case, heard in
    Britain, as well as the increased use of African Troops, in
    the Caribbean, and other islands, made the potential
    abolition of slavery a realistic threat to the colonies.
    ( slave owners were particularly paranoid regarding
    “uprisings by slaves, poisoning, plots, etc.” and the above
    court cases offered “hope” to those enslaved, which
    increased the actual threat, as well as the paranoia.)

    The victory, also blocked “westward expansion”, because
    the French controlled New Orleans and the Mississippi,
    and lands west, while the Spanish controlled Florida
    and Mobile….this prevented western expansion for
    slavery, as well as land speculation, because Britain
    used the native populations west of the colonies,
    as a buffer…..so they couldn’t be cheated out of it,
    or driven from it, or exterminated. ( by treaty )

    Smuggling being “illegal” and these other factors and
    threats to slavery most of all, were the causes of the
    “revolution”……greed was as good then, as it is now,
    and they would be proud of today’s plutocrats,
    because winning the “revolution” gave them the opportunity
    to “prove” that they were exactly the same, and actually
    worse, than the supposedly “tyrannical government”
    they overthrew. ( barely )

    You may continue to buy into the myth, that taxes of 1 or 2%
    was what caused a revolt, but most states have sales taxes
    that are 400 to 800% higher….including states with no income tax.

    Of course, if you actually knew what Jefferson did, you wouldn’t
    be quoting him…..although being that you are probably a “capitalist”
    maybe you would. There wasn’t a lot of capital back then,
    so he changed the entire slavery industry, to a chattel/breeding
    industry with children as “interest”, and slaves became a
    source of money and credit in the south. He managed to
    live on credit and died bankrupt…..so no inheritance for
    the kids, and no freedom for his slaves. But myths are
    powerful things…..so it might take a little longer to dispel
    these.