For upper middle income earners, high net-worth individuals, retirees, and certainly the “one percent” – where you live can make a huge difference in how much of your money you get to keep at the end of the year and how much you need to fork over to your state.
To help individuals and businesses make an informed choice, the Tax Foundation collects data on more than 100 tax provisions for each state and then ranks them to create its annual State Business Tax Climate Index. The 10 worst states on the list all levy complex, non-neutral taxes that favor some economic activities over others and have comparatively high individual and corporate tax rates.
The data are mixed as to whether a tough tax climate actually does push people and businesses to live in low-tax states. A report released last year by the Institute on Taxation and Economic Policy found that residents of states with high income tax were actually experiencing economic conditions that were as good as or better than those living in states without a personal income tax.
Plus, sometimes people are inclined to pay higher taxes to live in a certain location. New York, California and Maryland, for example, are all among the states that ranked worst for taxes, but they’re also hives of business activity, high salaries and employment. Meanwhile, families with children have historically been willing to pay higher property taxes in exchange for higher quality schools and other services.
Click here to see the 10 Worst States for Taxes in 2014
Top Reads from The Fiscal Times: