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
A state that doesn’t impose a sales tax simply gets the money elsewhere. That typically means taxing something else at a relatively high rate, or charging fees for things that are perhaps covered by taxes elsewhere. For example, NH has no income tax (though they do tax interest and dividends), but they have the 4th highest property tax rate in the USA. The state also has a monopoly on liquor sales (you have to buy from a state run store).
The state always gets their money. No income tax typically means higher sales and property taxes.
Most of these comments are correct, they have other taxes (sales, property etc..) and generally less well regarded public services (schools, roads, etc…)
But let’s not forget the other main source of their revenue; The Federal Government.
That’s right, the socialist blue states subsidize the shit out most of the freedom states.
There are some exceptions, but by and large the states that are proud not to have an income tax and shitty infrastructure while decrying socialism are more than happy to take a handout from Uncle Sam.
Don’t tread on me. And don’t tell me to feel my school kids lunch. But also don’t forget my federal highway money.
In Alaska we have no statewide sales tax, no income tax and those areas with sales tax are normally capped at a very small amount. Property taxes are fine, but the state makes most of its money from oil and tourism. It’s a weird place to live that’s for sure
As ELI5 as I can put it, by charging taxes other than income taxes (usually at higher rates than other states).
It’s a bad deal dude. In states with no tax, they use cops and citations/fines to make their money, while also having an excuse to underfund everything else.
There are only three concepts when it comes to running a state’s affairs based on taxes paid:
1. You get what you pay for.
2. You don’t get what you don’t pay for.
3. You don’t get what you pay for.
Tennessee follows second. Several New England states, for example, follows first. There are states which follow third and are, generally, the southern states with low literacy, high poverty.
No state income tax in Nevada because of the casinos. Visitors pay our taxes: thanks! We do have higher vehicle registration fees tho.
the irony i haven’t seen noted here is that a lack of income tax disproportionately benefits the rich.
the tax is made up from places people spend their money. sales taxes, property taxes, etc. the rich of course spend disproportionately less of their money than the average person.
but *some folks* think it’s the bees knees.
edit- oh i see this was noted a bit further down. ok never mind me!
In Florida, the toll roads and tourism taxes raise a lot of money. Our sales tax also ranges from 7-9% depending on the county. Property taxes are pretty high if you don’t have the homestead exemption.
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