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I'm a numbers guy, and I own my own financial business, so this should be fairly straight forward. But it's been somewhat of a challenge.
We are relocating from Indiana to somewhere south. I want it to be Charleston, but Florida is winning out because state income tax considerations are playing a significant role in my evaluation of options.
We are a considerably high earning family. 7% is a lot of money right off the top. This is basic economics.
So I understand the gist of the argument....Florida will hit me with higher property taxes. But it's property by property, house by house. And yes, if I don't want to pay a tremendous amount for that waterfront Florida gem, I can find another home with lower assessment value. So I have some control over my Florida property tax exposure.
Is there something I am missing that can somehow even this playing field to justify 7% right off the top? My understanding is SC schools are generally considered poor, so many go private, "which is one reason the low property taxes help". Well, that may be true, but 7% plus private school negates the low property taxes.
We love Charleston, but I need to make the math work when Florida and Texas put a lot more money in my pocket to spend as I see fit.
If you are in the highest marginal tax rate category, yes it's 7%.
However... South Carolina has more generous deductions than any other southeastern states (3,650 = personal income exemption)
Standard deduction (single): 5,700
Standard deduction (Joint): 11,400
44% deduction is allowed from net Capital gains
Social security income is exempt
We and other southeastern states do not tax Social Security Benefits, and we exempt disability retirement income from personal income taxes
South Carolina allows 36 personal
income tax credits. The most
substantial are the non-resident
credit, accounting for 61% of all
credits, followed by the two-wage
earner credit (22%) and the child
care credit (9%). The value of
personal income tax credits has
been steadily increasing since
2002.
Municipalities and states have expenses....schools, roads, police, fire, etc. You have to get the money from some place. If you have high property taxes and low states taxes or if you have low property taxes and high state taxes......you probably will end up in the same boat. At one time Florida could rely on tourist revenue to subsidize local expenses but not so sure that tourism taxes on hotels, etc. are enough to cover infrastructure costs locally or state wide.
It's important to look at all the living expenses and from what they have posted above -- while state tax rates may be higher, deductions, etc. may be higher as well.
Yes, I understand the theory, I'm just struggling to get anywhere near the equilibrium. It's a teachable moment to see it in practice. There's a reason Texas is booming, and it isn't because it's a beautiful state with palm trees, coast line, and culture.
It's cheap, abundant labor, explosive business growth, and favorable business regulation.
It should cause zero wonder among the learned class why 0% income tax states are growing in leaps and bounds.
As your income goes up, those deductions in SC mean less and less, and the 7% means a lot more than the marginal increase in property taxes in Florida.
Ultimately it comes down to a personal choice of being willing to pay more, as I just don't see how it's financially feasible to equate the two at a high income level.
Hmmm -- the boom in Texas may be less about no state tax and more about the oil.....but.....
If you need convincing to move some place and have a choice -- go to the place that will take the least convincing......
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Like you said, it's not subject to tax and that can be used to reduce a taxpayer's adjusted gross income
