With election year in full swing, there will be a lot of talk in the coming months about taxes. Who should pay them? Should the wealthy be paying more? What about individuals, who intentionally keep their true income low to keep from paying anything at all? Millions of Americans everywhere are divided on the tax issue, but with unemployment as high as it has been and slower job growth than normal, the United States does have some places that you can go to minimize or get rid of state taxes altogether. While the federal income tax will be fought out on the national stage, you may want to consider the following states to help alleviate some of what you owe in April:
Alaska is the tax hater's best friend. This state, far removed from the contiguous United States endures relatively harsh winters and mild springs and summer. They are so far removed from the rest of the country and have such a low population among the 50, that a state income tax is not necessary, even on interest and dividends.
Florida and Nevada (both 0%)
These two tourist hotbeds do not charge state income tax because they are able to amass enough revenue through tourism to locations such as Las Vegas and Miami. With tourists accounting for more than half of these states' overall needs, why put that burden on the citizen?
Tennessee and New Hampshire (both 0%)
These two states follow the same pattern of thinking when it comes to taxes. Don't ask the regular citizens to pay a state income tax, unless they're earning on interest income and dividends. This effectively ensures that the wealthy pay their portion of what is required for the state to improve and grow.
South Dakota, Washington, and Wyoming (all 0%)
These three states have considerable land mass but very few people living there per capita. Washington does have Seattle, but for the most part, these states derive most of their usefulness from the land rather than development, so the need for higher tax dollars just isn't there. Tourists also contribute quite a bit to the states' economies through sales tax dollars.
Texas has the same idea that Florida and Nevada do. They charge nothing in way of state income tax, and instead receive most of their support from tourism and local economic growth. Texas has often been considered one of the best run states in the union on account of the low unemployment and the myriad job opportunities. Cities like Houston, Austin, San Antonio, and Dallas, have also left a large footprint on the American culture allowing for much of the state's income to be tourist generated. The no state income tax is quite remarkable considering its size in land and population.
Dennis Piper CPA, Pittsburgh PA, is an accountant with over 20 years of experience. Services include business consulting and tax compliance to corporations, individuals, partnerships, limited liability companies, estates, trusts, and not-for-profits. Dennis was one of three Pittsburgh accountants who received an SBA award winning accountants in 2008.© 2012 Dennis Piper
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