Increasingly, Americans with $1 million or more in assets are considering moving to tax-friendly states and, in some cases, are looking to move out of the country in order to shield their wealth from higher taxes. In fact, this January, the international financial advisory firm deVere Group saw a 48% month-on-month increase in the number of high-net-worth individuals inquiring about permanently relocating outside the United States. Among some of the high-profile individuals who have recently left the U.S. for lower-tax countries are Eduardo Saverin, the billionaire co-founder of Facebook who recently moved to Singapore.
If you are considering a move to a more tax-friendly state, consult the Tax Foundation’s 2013 edition of Facts and Figures: How Does Your State Compare? It ranks all fifty states on forty different measures of tax and fiscal policy, from tax rates and business tax climates to excise taxes on products like beer, wine, cigarettes, and gasoline. Yes, forty different measures. That underscores the point that you can’t look at income tax rates in isolation to determine if a state is tax-friendly.
This year the most favorably ranked states include Alaska, with the lowest combined state and local tax burden; Wyoming, with the most attractive state business climate; and Tennessee, with the lowest state debt per capita. Least favorably ranked states include California, with the highest marginal income tax rate; Kentucky, with the highest excise tax on wine; and New York, with the highest gasoline tax.
Whether you are contemplating a move for a new job or to retire, keep in mind that, especially as the economy recovers, states are competing fiercely to attract new jobs and investment.
The 2013 edition of Facts & Figures: How Does Your State Compare? is available free online or by calling 202-464-5105.