How do some states (TN, FL, etc) get by with having no income tax? Why can’t every state get rid of it?
In: Economics
The no-income-tax states just get the revenue from other types of taxes like property, sales, payroll, etc. One way or the other, the state government will get funded. Wealthy people are able to game this system in ways the lower and middle classes can’t.
For example, a wealthy person can identify State A with low property tax and high income tax and State B with high property tax and no income tax. He can then buy property and show no income in State A while renting an apartment and showing all his income in State B. And he can have his company’s headquarters be in a State C with low business taxes and regulation, even if the “headquarters” is little more than P.O. box.
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