Does it make sense to relocate to another state in order to save on taxes? Depending on your situation, it could make all the sense in the world. The more money you earn and the higher your current state tax burden is, the smarter this move could be. But the benefits go far beyond simply tax savings. It could be the best way to safeguard your job, business and property value.
The Frightening Reality That High State Income Tax Threatens
Even if you don’t mind paying higher income taxes, people all around you are saying they don’t like it and they are voting with their feet. According to Investors’ Business Daily, 1000 people move out of high tax states and move to low tax states every single day. In the past 10 years, there has been a mass exodus of people leaving high tax states such as California, New York, New Jersey and Connecticut. In fact 3 ½ million more have left than have moved in to those states during that time.
That migration hurts jobs, incomes, the local economy – and the value of your homes and businesses. So you could lose a great deal of what you’ve worked hard for
if you ignore this trend – even if you don’t mind paying higher property taxes.
And it could be one factor that helps you decide to pick up your stakes and move to a more tax-friendly environment – before things get ugly at home. Right now your job might be solid and your home values could be high. But there may be a better job waiting for you elsewhere. And it might be easier to get a better home in other states. In any event, the last thing you want to do is wait too long, wake up one morning and find that you have no job and nobody wants to buy your home.
To be sure, high taxes can be reversed. There have been states (like Illinois) that used to impose high taxes and later lowered them in order to turn things around. In the case of Illinois, this stemmed the tide of their population loss and helped reignite their economy.
And to be fair, there are other forces which impact population growth such as weather, politics and employment law. But you don’t have to be an anthropologist to figure all this out. Just watch where Americans are relocating. These are the places where new businesses are going to form and the local economies will expand. That in turn should help increase the value of business investments and real estate.
Where Should You Move?
If you follow the population trends, you can see that people are moving out of the North East and towards the South. To be sure, some of this might be explained by the aging population. But at the end of the day, it doesn’t matter. Those are the places where it will be easiest to find jobs, grow businesses and buy a home that will appreciate.
Do state income taxes play a part in your decision of where to live? Why or why not?