From the FT:
Sir, I was glad to see Merryn Somerset Webb’s article “The perfect tax” (House & Home, September 28), but I would like to respond to one point.
Ms Webb refers to an out-of-control property bubble in the US from which, as far as she can see, Pennsylvania was never immune. It should be noted that only 20 or so towns in Pennsylvania have (partial) location value taxation, so a property bubble that included, at least, other parts of Pennsylvania does not refute the idea that an LVT can suppress the boom and bust cycle in real estate.
Also, the boom and bust cycle was notably severe in California and Florida, which have low property taxes, and mild in Texas, which has no income tax and relies to a larger extent on the property tax.
Nicholas D Rosen, Arlington, VA, US.
Just to back that up with some boring statistics:
The IRS isn't the only one who wants a piece of your paycheck - 41 states have a broad-based individual income tax. Only seven states lack an income tax altogether. They are:
Two states have a limited income tax on individuals. These states tax only dividend and interest income:
Will I Pay Less Taxes Overall in These States?
Not necessarily. States need revenue to function, and these states will have to make up for the lack of income tax somehow. New Hampshire and Texas, for example, make up for it in property taxes. Both states have some of the highest property taxes in the nation. The cost of higher property taxes, sales taxes, fuel taxes, and other taxes could amount to higher overall taxes in some of these states.
That being said, most (but not all) of these states did make the Tax Foundation's top ten list of states with the lowest overall tax burdens.
And quoting from The Tax Foundation:
To rank the state’s tax burdens, the Tax Foundation compared the total taxes that state residents pay as a percentage of per capita income. Included in the total taxes are local taxes such as property taxes and local sales taxes. The states whose residents pay the least in taxes are:
Alaska at 6.4% of income
Nevada at 6.6% of income
Wyoming at 7% of income
Florida at 7.4% of income
New Hampshire at 7.6% of income
It’s interesting to note that none of these states have an individual income tax.
Sunday, 6 October 2013
From the FT:
My latest blogpost: Reader's Letter Of The DayTweet this! Posted by Mark Wadsworth at 17:14