Sally Redux

Blade...

Sorry...back to taxation.

MarylandNed

I know many people like that. They still complain about lack of government services though.

beachgal21

They're happy to use the infrastructure that taxpayers money has paid for, but want to pull the ladder up behind them ..... It's selfish

Pulaski

I am inclined to agree. Between income tax, sales tax, property tax, and gas tax, they're going to take their share, and overall there isn't much difference from state to state. I am certainly not in a hurry to move to Texas for zero income tax because I'd be shafted on property tax. That said, combined state income tax for Mrs P and me is in the same ball park as we'd pay in property tax in Texas, which kinda proves my point I suppose.

Steve_

It can be a major problem, usually private pensions are recognized under the tax treaty but only for federal purposes.

Most pensions are tax deferred saving plans, but the State will not recognize a foreign plan for State tax purposes (usually, I hear there are some exceptions but no-one has yet given me an example).

So this means you are subject to State income and capital gains tax on phantom income and phantom gains inside your pension, because even if you make the election under the tax treaty, only the Federal tax is deferred.

The last revision to the US-Canada tax treaty allows people with say, a 401(k) in the US to carry on contributing to it when they move to Canada and to an RRSP if they move to the US - but if you do that you could still be subject to State taxes on the investments held inside the RRSP.

Steve_

There is a significant difference from State to State, it's why so many rich people move to New Hampshire. The whole Florida tax system is set up for retirees. It's why so many people "live" in Alaska and have a home in Arizona (e.g. Sarah Palin). Loads of people travel to States with no sales tax to shop.

Anyone who doesn't bother to check tax rates when figuring out where to live in the US is an idiot, imo.

Even if you assumed that the overall tax burden was roughly similar, they are weighted in different ways so depending on what your job is, whether you're retired etc. there are methods of tax avoidance you can use.

Like for example you use Texas - property taxes actually aren't all that high in Texas contrary to popular belief but let's say they're higher than in North Carolina. Say you rent and don't pay any property tax. Say you live with your parents who pay the property tax.

Say you live in Washington State - no income tax, but quite a high sales tax, but if you live in eastern Washington (e.g. Spokane) you can travel to Montana down I-90 quite easily which has no sales tax.

RICH

I can see a rival to Tonrob's Points thread - Living Well by Avoiding Taxes.

JAJ

This doesn't sound true.

Most states start with the Federal definition of income, and adjust it for state specific items. And while it might be an interesting theoretical discussion, has there ever been one single real, actual case where a person has been taxed this way? As in the IRS or a State authority enforcing something like this on audit, not some kind of unnecessary self-declaration.

States don't usually allow foreign tax credits, that's a different issue.

nun

This is not true for Massachusetts as stated on the MA DOR website:

"If the United States has a tax treaty with another country, Massachusetts will recognize the treaty and will exclude income to the extent it is excluded federally. Most treaty provisions are reciprocal; if an item of income is not taxable to a U.S. resident who is working in a country overseas, it will not be taxable to a nonresident alien from that country who is working in the U.S."

Pulaski

You make a few valid points, and for people with high income and/ or lots of taxable assets (large home, expensive cars), there might be some tax to be saved, but while having two houses might create some "tax planning opportunities" for most people it would cost more than the taxes save, and if you have a job, family, or other ties to one location it doesn't help much having two houses in different states. Neither does it make any sense to drive 200 miles in an SUV ($70 of gas) and stay the night in a hotel ($300 incl meal and drinks) to save 6%-8% on even a $2,000 spending spree.

Despite your scratching around to try to make an argument, for most people/families with one house, earned income (one or two), and spending most of their income on living expenses, they will pay a mix of income, property, vehicle, and sales taxes, and while the mix will vary, the aggregate amount won't vary so much.

Steve_

https://www.ftb.ca.gov/law/infoletter/20030321.pdf

Can't see the logic would be much different in other States, unless their State law specifically recognizes a foreign jurisdiction.

The election they're talking about is the deferral of tax in a pension plan, which is applied for on Form 8891, although for other countries it would be Form 8833.

Steve_

There are innumerable border towns that depend for their very existence on tax differences, I seem to recall a lot of people drive up from South Carolina to North Carolina to buy gas because the taxes are lower for some reason.

My "scratching around", have you not seen the endless articles in Forbes or wherever where they point out the best States to retire to for TAX REASONS. There is an entire industry based around it.

I've literally sat in a traffic jam on the Deerfoot talking to someone who was driving down from Alaska to Arizona who had their permanent residence in Alaska in order to not pay Arizona income tax and get the Alaska tax rebate.

And you don't need "two houses" either, try visiting Apache Junction during the winter, no property tax, the place is covered with RVs.

Steve_

So as per usual, Mass. is more progressive. Strange that California won't do it.

md95065

California needs all the money that it can get its hands on.

Hotscot

Yup...even if your business makes no profit at all you still have to pay a minimum of $800 annually as a franchise tax "fee".