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But the costs differ depending on personal situation. Higher-income, frugal people will be most sensitive to state/local income tax. Housing costs won’t matter much, and other fees/costs won’t matter at all. People who spend most of their money, will be more sensitive to sales tax, property tax and so on. People at lower income levels would save money even in costlier areas, if those areas provide subsidies or other benefits. So yes, "we get what we pay for"... but the question as to who pays, and who gets, depends very much on state/local tax policy.
In my current locale, I pay more in state income tax than for my housing costs. Rephrased, if I move somewhere where housing costs double, but state income tax is zero, there’s a net savings.
Perhaps remarkably, not all of us have relatives or local ties. This means both a freedom to move “anywhere”, and a paralysis-by-analysis. If there’s no compelling reason to be anywhere, then wherever one goes, one has only one’s own choices to blame, if the choice becomes unpalatable or disadvantageous. That’s quite a burden, isn’t it?
Yep, averages only go so far. The average tax burden is similar in both OR and WA but it is distributed dramatically different. WA has one of the most regressive tax systems in the country up there with Texas. So the wealthier you are the less you pay in taxes as a percentage of your income. Oregon is the opposite. The wealthy pay more due to a progressive income tax and no sales tax. If you earn $250k/year your tax burden in OR and WA is dramatically different than if you earn $25K/yr.
As for analysis by paralysis. Yes that can be a problem. In our case we have three daughters with 5 years separating the oldest and middle, and 3 years separating the middle and youngest. Once the oldest got into HS age we basically felt it was fair to stay put until she graduated so she wouldn't be forced to change schools and move across country in the middle of HS. She was super involved in school and athletics and such. Once she graduated it was our narrow window of opportunity because the middle child was entering 8th grade and the youngest was entering 5th grade, which basically meant they would both be moving on to new schools anyway, no matter where we were living or even if we stayed put. But we had to get a move on it or the middle child would soon be in HS too and then we would be stuck again.
So we penciled 2016 as our targeted move year and spent the several years leading up to it leisurely exploring locations and employment opportunities around the country. We both had jobs and a house lined up months before we made the move. My wife had her job lined up about 9 months in advance and for me it was about 5 months. We also made at least 6 separate trips from Texas out to Camas over the two years before our move, for job interviews, for visiting family, and so forth. And during all of them we took advantage of the opportunity to drive all over Camas and Vancouver and other parts of the Portland metro looking at homes and neighborhoods and commutes and such. And I probably spent every morning for a year checking Zillow for Camas and Vancouver before getting started with work.
We actually closed on our house the day of our daughter's HS graduation, checked into a La Quinta for our last night in Waco, and pulled out bright and early the very next morning.
...The average tax burden is similar in both OR and WA but it is distributed dramatically different. WA has one of the most regressive tax systems in the country up there with Texas. So the wealthier you are the less you pay in taxes as a percentage of your income. Oregon is the opposite. The wealthy pay more due to a progressive income tax and no sales tax. If you earn $250k/year your tax burden in OR and WA is dramatically different than if you earn $25K/yr.
One of the amazing things about American culture and politics, is that just by crossing a river, in this case the Columbia, one might save (or forfeit) tens of thousands of dollars a year. It's almost as if the border between Oregon and Washington were more consequential than that between say Poland and Germany.
Your point about unequal outcomes, is one reason why the 8 or 9 US states without state/local income tax are so appealing. Of these, most have harsh climates, or what might be termed socially conservative politics, or both. In fact the only remaining palatable places, by those criteria, would be western Washington or southern Florida. If it were JUST a matter of climate, culture, social life and career prospects (that's 4 big ones, right?) I'd stay in Southern California, pay $1.3M for a tiny house in a middling neighborhood, and call it good. But writing those fat checks to Mr. Gavin Newsom... hurts.
Now cue the contempt for transplants from California (and BTW I'm not a native, by any stretch)....
One of the amazing things about American culture and politics, is that just by crossing a river, in this case the Columbia, one might save (or forfeit) tens of thousands of dollars a year. It's almost as if the border between Oregon and Washington were more consequential than that between say Poland and Germany.
Your point about unequal outcomes, is one reason why the 8 or 9 US states without state/local income tax are so appealing. Of these, most have harsh climates, or what might be termed socially conservative politics, or both. In fact the only remaining palatable places, by those criteria, would be western Washington or southern Florida. If it were JUST a matter of climate, culture, social life and career prospects (that's 4 big ones, right?) I'd stay in Southern California, pay $1.3M for a tiny house in a middling neighborhood, and call it good. But writing those fat checks to Mr. Gavin Newsom... hurts.
Now cue the contempt for transplants from California (and BTW I'm not a native, by any stretch)....
I don't know anywhere else in the US where there is a major thriving metro area where you can do the tax arbitrage like you can across the Columbia between Portland and Vancouver.
Maybe New Hampshire and Massachusetts. But that border is more rural and not right next to Boston. Still there are Bostonians who move all the way to New Hampshire for the tax advantages. But that's more like a 50+ mile drive from Boston.
The tax burden in the Vancouver area seems favorable, at least on first inspection, even without the cross-river arbitrage. Let's compare to Texas, which just like Washington has a sales tax but no income tax. Property tax rates are higher in Texas, quite a bit higher I believe. The state portion of the sales tax is nearly the same (6.5% vs 6.25%), and neither state taxes groceries.
Am I missing something? Are there other taxes/fees that compensate for the lack of an income tax? I've read that there are higher taxes on alcohol, and high auto registration fees. I have a hard time imagining these being enough to negate the lack of an income tax, however.
... Are there other taxes/fees that compensate for the lack of an income tax? I've read that there are higher taxes on alcohol, and high auto registration fees. I have a hard time imagining these being enough to negate the lack of an income tax, however.
It's a fascinating question, not just between the various zero-income-tax states, but between all states. Yes of course, some states "squander" more public funds than others. Some offer more services than others. But all states have public schools, paved roads, police and fire. All states have Departments of Motor Vehicles, licensing for architects and attorneys, oversight boards and so on. All states have courthouses and jails. Within them, all counties have building departments, sanitation, street sweeping and so on. Public libraries. County buildings. Street-lights. Roadside mowing. And so on.
Choose your favorite punching-bag of mismanaged or impoverished state, depending on your political orientation; nevertheless, it still has these things! How is it, that some are entirely able to forego income taxes, while others have marginal rates of 10% and above?
The property tax question is perhaps easier to answer. States where housing costs less, typically have higher property tax rates, and vice versa. So if State A is a wealthy coastal state, and State B is an impecunious Heartland state, such that the median house costs $800K in A and $200K in B, it's likely that the property tax rate in A, is much smaller than in B. Homeowners in A and B pay similar total property taxes, but B captures a larger percentage of the house-value annually. This is another example of the fallacy of cookie-cutter COL calculations or "best places to retire" top-10 lists. The much higher top-line housing costs in State A don't necessarily translate into higher recurring costs, especially for buyers who are wealthy enough, to come in paying cash.
In my former locale of Ohio, housing-prices are approximately at the level of dogfood. But property taxes can easily be 2.5% of market-value, especially in the cities (local variations are large). So in 40 years of ownership, disregarding inflation, one might have paid to the state the entire value of one's house, in taxes!
From my admittedly superficial analysis, Washington State seems to be particularly low-COL for wealthy people who want to live frugally and watch their portfolios grow. But to your point, there seems to be a catch somewhere, a too-good-to-be-true face-palm realization lurking somewhere. One wonders what that might be!
It's a fascinating question, not just between the various zero-income-tax states, but between all states. Yes of course, some states "squander" more public funds than others. Some offer more services than others. But all states have public schools, paved roads, police and fire. All states have Departments of Motor Vehicles, licensing for architects and attorneys, oversight boards and so on. All states have courthouses and jails. Within them, all counties have building departments, sanitation, street sweeping and so on. Public libraries. County buildings. Street-lights. Roadside mowing. And so on.
Choose your favorite punching-bag of mismanaged or impoverished state, depending on your political orientation; nevertheless, it still has these things! How is it, that some are entirely able to forego income taxes, while others have marginal rates of 10% and above?
The property tax question is perhaps easier to answer. States where housing costs less, typically have higher property tax rates, and vice versa. So if State A is a wealthy coastal state, and State B is an impecunious Heartland state, such that the median house costs $800K in A and $200K in B, it's likely that the property tax rate in A, is much smaller than in B. Homeowners in A and B pay similar total property taxes, but B captures a larger percentage of the house-value annually. This is another example of the fallacy of cookie-cutter COL calculations or "best places to retire" top-10 lists. The much higher top-line housing costs in State A don't necessarily translate into higher recurring costs, especially for buyers who are wealthy enough, to come in paying cash.
In my former locale of Ohio, housing-prices are approximately at the level of dogfood. But property taxes can easily be 2.5% of market-value, especially in the cities (local variations are large). So in 40 years of ownership, disregarding inflation, one might have paid to the state the entire value of one's house, in taxes!
From my admittedly superficial analysis, Washington State seems to be particularly low-COL for wealthy people who want to live frugally and watch their portfolios grow. But to your point, there seems to be a catch somewhere, a too-good-to-be-true face-palm realization lurking somewhere. One wonders what that might be!
Enter StealthRabbit to hear his many experiences with high WA RE taxes along with many battles fought. Check with rkcarguy and his many posts discussing multiple stories of residents getting 'taxed' out of their paid off homes. It's a thing in WA depending on the situation, the home's assessed value, etc... For some its worse than for others.
The property tax question is perhaps easier to answer. States where housing costs less, typically have higher property tax rates, and vice versa. So if State A is a wealthy coastal state, and State B is an impecunious Heartland state, such that the median house costs $800K in A and $200K in B, it's likely that the property tax rate in A, is much smaller than in B. Homeowners in A and B pay similar total property taxes, but B captures a larger percentage of the house-value annually.
That's sensible reasoning. But let's take the a specific TX vs WA example. I looked up a few detached single-family homes, 2300-2500 sf, built since 2005. In the Austin suburb of Round Rock the property tax is roughly $750/mo on such a house, while in Vancouver it's around $400/mo. I'm trying to be fair, in choosing middle-class suburbs of a medium-sized city in each case.
Quote:
Originally Posted by ohio_peasant
From my admittedly superficial analysis, Washington State seems to be particularly low-COL for wealthy people who want to live frugally and watch their portfolios grow. But to your point, there seems to be a catch somewhere, a too-good-to-be-true face-palm realization lurking somewhere. One wonders what that might be!
This is what I'm really after. Is there something I'm missing? I've read some older threads here on the subject, and one thing that seems to come up is the cost of auto registration. I guess I'll have to do a little research to see what the damages would be. Compared to Oregon, yes it's expensive. I used to live in Oregon. It's a good place to live if you have ten or twenty cars.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by hikernut
That's sensible reasoning. But let's take the a specific TX vs WA example. I looked up a few detached single-family homes, 2300-2500 sf, built since 2005. In the Austin suburb of Round Rock the property tax is roughly $750/mo on such a house, while in Vancouver it's around $400/mo. I'm trying to be fair, in choosing middle-class suburbs of a medium-sized city in each case.
You can explore 'generalities', but specifics are important to consider BEFORE you plop down the cash / commitment to a property. Example... My Texaqs properties are simjilar value to several I have in WA and the property taxes (generally) are about 1/3 on my Texas properties (Several reasons, assessors, counties, building types, levies...). My rental cash flows are far better on my Texas properties. (a bunch of costs and expenses aggregated)
Quote:
This is what I'm really after. Is there something I'm missing? I've read some older threads here on the subject, and one thing that seems to come up is the cost of auto registration. I guess I'll have to do a little research to see what the damages would be. Compared to Oregon, yes it's expensive. I used to live in Oregon. It's a good place to live if you have ten or twenty cars.
Very easy to determine at regional websites.
Again... that varies on what you drive, how you insure, how you use vehicles, capital costs... (I have more than 2x 20 cars + that many motorcycles, trucks... all WA registered) +/-. but of course MT and OR are more popular places to register your expensive licensed / registered vehicles, boats, airplanes... Which can be done LEGALLY (even if you domicile in WA) if you follow the strict regulations.
That's sensible reasoning. But let's take the a specific TX vs WA example. I looked up a few detached single-family homes, 2300-2500 sf, built since 2005. In the Austin suburb of Round Rock the property tax is roughly $750/mo on such a house, while in Vancouver it's around $400/mo. I'm trying to be fair, in choosing middle-class suburbs of a medium-sized city in each case.
This is what I'm really after. Is there something I'm missing? I've read some older threads here on the subject, and one thing that seems to come up is the cost of auto registration. I guess I'll have to do a little research to see what the damages would be. Compared to Oregon, yes it's expensive. I used to live in Oregon. It's a good place to live if you have ten or twenty cars.
I think this is really going to boil down to individual 'sweet spots' within a each state's tax system depending one's income, property owned (acreage property, modest suburban home, mansion, condo) and income tax bracket. Things like vehicle registration are honestly in the white noise compare with much higher overall annual taxes one has to fork out... or not.
Maybe the sweet spot for Oregon is middle to lower income households due to its progressive tax structure, to TexasDiver's point. Whereas in WA its regressive, so possibly better for mid-higher income earners or even the wealthy.
If you read the CD WA forum and all the complaints since folks love to do that (a favorite pastime for some), you'll see the usual suspects including new taxes on gas, utilities, etc... I do like to drive and after moving from CA, I was always so happy to see the lower gas prices. Of course friends in TX have us beat by a mile. So, its relative to the individual, I think. But for us, living in a somewhat average suburban neighborhood, taxes are not bad at all. By contrast, if we moved across the river to Oregon I would instantly be losing 10% of my income and the rest would be in the noise. So, its definitely better on this side of the Columbia for us. Overall COL is much lower than CA. Although I would love to see Prop 13 'like' tax law pass for WA residents at some point. That would reduce many of the complaints from folks like rkcarguy and StealthRabbit among others when it comes to getting taxed out of folks homes.
Retirees with paid off homes really do have a big tax advantage in CA especially those on lower fixed incomes (low property tax, low income tax). Or like the owner our previously leased beach home, he has many incomes properties in CA and NV (near Tahoe) living just enough time in NV to claim residency and not get killed with CA income tax.
Derek
Last edited by MtnSurfer; 01-13-2023 at 02:32 PM..
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by MtnSurfer
Enter StealthRabbit to hear his many experiences with high WA RE taxes along with many battles fought. ...
lots of examples, each very dependent on your situations.
My current home property taxes used to cost less than my groceries ~$3/ day for family
Today, the same (more worn out) home property taxes cost me 14x my daily cost of groceries.
Just set your priorities.
Eat... or feed the insatiable government.
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