April 14, 2008
Burdened by taxes? Try a new location.
By Kathleen Connell
Cherry blossoms in the nation's capital; opening day of the Boston Red Sox season; sails billowing on Chicago's Lake Michigan. Such rites of spring are sure to evoke a smile in mid-April.
Equally symbolic, if generally less welcome: tax time. With the ink not yet dry on many checks to state and local governments, Americans are focusing more on their tax burdens than on their local climate and attractions.
Yet many may never have considered taxes when deciding where to live. For most working families, employment opportunities, reputation of public schools, and proximity to family are the dominant factors when choosing to move. But once they have committed to a job, seeking a community to call home offers an opportunity to "tax shop" for a less expensive jurisdiction. Even within a county, taxes can vary as a result of special city levies.
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Taxes have also become a marketing focus, as states compete to attract residents. The District of Columbia's 12.5 percent tax burden, as a percentage of income, is not competitive with its closest neighbors, Virginia's 10.2 percent and Maryland's 10.8 percent. The bordering states of Arizona, California, and Nevada also create tax opportunities for residents who may choose to work in California, but reside in the lower tax states of Arizona or Nevada. Check out your state's competitive position at the website of the Tax Foundation (www.taxfoundation.org/taxdata/), a Washington-based nonprofit group. [Read the full article.]