State Taxes and Jobs

[origun]

Effect of tax structure on economy

I have no statistics at my fingertips but I live in Oregon, a state with a fairly high income tax. Some people would say that has caused unemployment to be above the national average. However, I believe that is highly questionable. The state has traditionally relied heavily on wood products and tourism, sectors of the economy hit hard by the housing crisis and general poor economy.

Income tax is only one aspect of the general tax climate. We have no state income tax so the overall tax burden isn't any higher than in many states. I often do taxes from people moving here from CA or WA and they'll usually complain about the income tax here the first year they file an OR return...but I always remind them that they are no longer paying sales tax...and for some of the more thoughtful ones, that makes sense to them.

[erchess]

Two Points

As has been pointed out by others in the thread, what matters is not something simple such as the presence or absence of any given tax but the total tax burden on the population. I would also add that the value of personal services provided by government lessens the burden.

Second. I do not think that taxes generally hurt a business. Taxes including the personal taxes on the owner get passed through to the customer. This can hurt profit only if the price passes the tipping point at which price reduces demand by more than the increase in revenue due to the higher price. Here's a good example. I live in NC near the southern border and I frequently travel to SC. SC compared to NC has a higher gas tax and yet cheaper gas but still there is no shortage of gas in SC. Apparently the tipping point price for Gas is lower in SC than in NC.

[Snaggletooth]

Nothing Conclusive

The no-tax states are Texas, Washington, Nevada, Wyoming, South Dakota, Florida, Tennessee and New Hampshire. Maybe Alaska - I don't know much of what happens up there.

The original Nashville post perhaps pre-supposed that corporations who create jobs actually care whether their workers pay income tax or not. Sure enough, there is nothing conclusive that can be correlated to a lack of personal income tax.

Perhaps a better tax-related question might be "Do states with lower CORPORATE and PAYROLL taxes attract more jobs?"

The nine states listed in Nashville's post have unemployment rates as follows. Three of them are higher than the national average, and one of them is virtually the same as national average.

In descending order:
12.1% Nevada
10.6% Florida
9.7% Tennessee
9.2% NATIONAL AVERAGE
9.1% Washington
8.0% Texas
7.4% Alaska
6.0% Wyoming
4.8% New Hampshire
4.8% South Dakota

[joanmcq]

South Dakota pretty much became the center for all the credit card companies because it doesn't have usury laws. This is why credit cards can charge 29.9% interest. CA has a limit on how much interest can be charged, but the limit doesn't apply if the company is located in SD. Good for SD, but good for the rest of the nation?

Washington DC may have a 3% overall unemployment rate, but the District has one of the largest disparities between the 'haves' and the 'have-nots'. There is government and there are the slums. MLINDER apparently works in a 'have-not' area, and yeah, for largely African American areas, 25-30% unemployment is actually quite low.

Alaska has no income or sales tax. Residents get cash back dividends from their government from the oil revenues, since unlike CA, they actually tax the depletion of their oil.

Tax burden is a complicated thing. I live in a pretty high income and sales tax state (CA), but our property taxes are really low due to Prop 13, and if you owned your home in 1978, you are taxed pretty much on your 1978 values. I pay less in property tax on my $215,000 home I bought in 2000 than my dad did on his $65000 home in PA (income tax rate 3.07%). I have clients that pay less than $300/year in property taxes. Texas, however is comparatively high in property tax rates.

However, income taxes are what is brought up whenever job creation is discussed. Hows that sales tax in Tennesee? 12.5%?

[JON]

Minnesota

I think is an example of what is going on in the rest of the nation now. MN at one time was proud of the number of Fortune 500 companies that had there home offices here. They were proud enough to become arrogant about it. Although we still have home offices here what we missed out on was the expansion of activities of those who started here. The expansion just did not happen here because when you did the first grade math you could see it was more expensive to do it in Minnesota. Our Gov in his 1993 or 1994 State of the State said in 1982 the three largest employers in the State of Minnesota was 3M, Northwest Airlines and Northwest Banks by 1992 the thre largest employers were the University of Minnesota, State government and federal government. It has only gotten worse since then.

About 10 years ago Target, a MN corp, was planning to have a big regional warehouse operation. It narrowed its choices down to a few places including Mankato, MN and Cedar Falls, IA. It ended up in Cedar Falls, IA. It would have been nice in MN.

Minnesota's government culture has just adapted the attitude will noone is as smart and as good looking as us. Just ask us!!! So I do not know, but I think Government in MN has become dog and the not working for Government in MN has become the tail.

Now you guys should not laugh too much. If you look at the largest employers in your states I think you may be surprised who you will find at the top or near. We got here fast and maybe first, but most were following. I would have to say CA you have some huge problems and if the fed starts bailing out states there will be a rush by the states to go bankrupt fast to get the money before the fed runs out. MN's state main retirement fund by law says the assumption is 8.5% is the rate of future returns on current funds which helps show the unfunded portion at like $4.5 billion. If you use a more accurate rate of return I have been told the unfunded protion wou be over $20 billion. Elected officials in DC and at our States ignor as much as possible as hope they are out of there before it has to be solved. Government works best for those who work for it. Now that the boomers are going to retire MN is going to have to figure out how to handle some of the problems.

I would still appreciate if you guys and your clients would move to MN. Maybe we can reverse our trends if you guys would do it. By the way there are a huge amounts of MN who upon retirement will go to FL and TX so there retirement funds will not be taxed.

COME TO MN PLEASE!!!!!!!

[joanmcq]

I would still appreciate if you guys and your clients would move to MN. Maybe we can reverse our trends if you guys would do it. By the way there are a huge amounts of MN who upon retirement will go to FL and TX so there retirement funds will not be taxed.

COME TO MN PLEASE!!!!!!!

Too darn cold!! CA has the same pension problems which were exacerbated when we had one big year of surplus (1999) from the .com boom which cause the tax cutters to cut taxes and CALPERS to say the state didn't need to fund the pension fund that year since it had gained so much it was fully funded. So law enforcement and corrections officers got nicely enhanced pension benefits on top of what they already got, which was pretty sweet.

Enter 2000 and the .com bust. The general fund has been short by the amount of the tax cuts that were put into place in 1999 but the sitting governor was ousted trying to raise only one of them to their former levels (tax cutters screaming, 'he's raising our taxes!') and the deficit is now threatening to bankrupt us along with the enhanced pension benefits. And the legislators are playing at politics and sound bites instead of growing up and trying to find a solution to the mess. There is a saying 'As goes CA, there goes the nation' which used to be a compliment to CA as being forward thinking. But it seems our totally dysfunctional politics are spreading to MN & WI and who knows where else.