Tuesday, February 13, 2007

TaxingTennessee Taxes Logic

Some details that were left out of this story:

  • Only one state listed as the destination of outbound Ohio households is among those imposing the lowest tax burden the incomes of its residents: Alaska, where less than 500 Ohioans transplanted. The other lowest tax burden states (New Hampshire, Delaware, Tennessee, and Alabama) are not among the destinations accounting for the flight. Why are the Ohio households not moving to these states--especially to Tennessee, which is practically Ohio's neighbor--in the thousands that they are to Florida and Texas? If "leaving taxes" is the primary or overwhelming reason for flight, then the two lists should mirror each other.
  • Alaska has the lowest tax burden in the country because it taxes the rest of us for oil extracted from the state. So, Alaskans don't have to pay for their services because the rest of us foot their bills for state programs every time we fill up our tanks. Unless Ohioans move to Alaska, they're still going to bankroll Alaska's state services regardless of whether they move out of Ohio. Texas, which is the 2nd favored place for Ohioans to move, also exports its severance tax burden on other Americans.
  • Alaska has one of the highest cigarette taxes. File that under "trading one tax for another."
  • Ohioans who favor Nevada trade an income tax for a sales tax that is among the highest. Sales taxes are regressive: they tax the poor and the lower middle class more than they do the upper classes. So, the rich households moving from Ohio will benefit from a move to Nevada. Anyone middle and below will still suffer tax burdens in other ways.
  • The Sunbelt Factor: the top three states favored by exiting Ohioans are Florida, Texas, and Nevada, all of which have warmer climates. Where exiting Ohioans favored Alaska, South Dakota, and Wyoming in hundreds, they favored the Sunbelt States in thousands, and in the case of Florida, in tens of thousands. Yet, there is no mention of the possibility from Ben Cunningham or the Cleveland Plain Dealer that the climate may be spurring people out of colder-than-Sunbelt Ohio. There is also no break down of exiting Ohioans who are entering retirement, which would be a group that traditionally looks to move to warmer environs. Also, Nevada real estate is relatively cheap.
  • The New Hampshire Factor: New Hampshire collects no sales tax whatsoever. Why isn't it higher on list of people moving out? Why? Because it's not sunny Florida, that's why. There's a whole group of New Englanders bound for Florida called "Snow Birds." If taxes were an exclusive priority, there would be no Snow Birds.

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