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Richard Rider

The little-noted lesson to be learned from Seattle’s desperate attempt to impose a city income tax

This article (click on the URL) details Seattle’s desperate (and likely unlawful) effort to impose a CITY income tax to pay for their runaway pensions — even though state and city charters forbid such a levy.  It’s a worthwhile read. 

But in addition to the pension fiasco, for wealthy Californians there’s another lesson to be learned from this latest attempt to impose an income tax in Washington state. When (more likely than IF) a rich Californian finally decides to depart the Golden State and its sky-high 13.3% state income tax, it’s important to look at the POLITICS of the lower taxed state you move to (ALL of the other 49 states have much lower state income taxes!).

For instance, look at the income-tax free states. Nevada and Washington state both have zero state income tax, but today they vote Democrat more often than Republican. It’s only a matter of time before both states impose a “temporary” state AND/OR local income tax.  Florida is another big risk state, thanks to the massive in-migration of retired Northerners (mostly liberal). If you move your tax residence to these states, keep a bag packed for the next move.
Even Texas is becoming less reliable. Trump won, but not by a huge margin (9 points). Its major cities are already run by Democrats. Texas will probably avoid a state income tax for another decade or so, but looking at the Lone Star State’s trend, it’s clear that ultimately they may well cave on this issue.
Two other zero income tax states are South Dakota and (sorta) New Hampshire. Both states are politically unreliable — especially New Hampshire, which is flooded with liberals fleeing the higher taxed neighboring New England states (people not able to connect the dots).
Instead one should look at Tennessee, which is in the process of ending the last remaining vestiges of their state income tax (it now taxes only dividends and interest). Tennessee voted strongly for Trump in 2016, and it’s unlike the state will go Democrat for 20 years or more.
Income tax free Wyoming is another excellent choice, but it’s too cold and rural for most folks.
NOTE: For middle class Americans, a state’s income tax is less of a concern — with deductions, exemptions, tax credits, etc. But for the upper 1/5 of Americans, it can be a BIG deal.