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Is a state income or sales tax a better way to raise revenue?


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    I moved to Portland in 2012 and immediately fell in love with the fact that the state doesn't have a sales tax. The price I see on the item(s) I want to buy is the price I'll pay. It was such a foreign concept to me.

    What I didn't think about during that period of time is exactly how the state gets money if they don't have a sales tax. What I found out during the 2013 tax season is that the state largely gets its money by having a pretty high state income tax.

    I've been here nearly a decade now and I still haven't figured out if I would be paying more or less if I lived somewhere else. On the one hand, I don't have to pay any taxes on purchases big and small, fancy dinners, or nights out (when we can do that again). On the other, my wife and I pay A LOT in state income taxes in addition to our Federal tax obligations.

    Has anyone ever really dove into this and done the math? I know the people who make out the best are those who live across the river in Vancouver, WA. They have no state income tax and their residents can simply travel across the bridge to do all their shopping. But for people who live in Portland (and the rest of the state) I wonder if we are doing it right.

    So which one do you think is better? Little to no state income tax or no sales tax?

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    Haven't really done the math when it comes to moving to another state, but being a Texan, I'm grateful that I don't have to pay State Income Tax.
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    I guess if you really wanted to get out the calculator and run the numbers (something I'm usually down for) then you would also have to factor in property taxes. And then even social security taxes if you are a retiree. And found out your total tax liability vs other states.

    Actually as I'm writing this I googled it and found this article called 2020's Tax Burden by State which factors in all taxes more or less per state.

    If you compare Texas vs Washington for example it's closer than you would suspect. Washington ranks 29th with a total tax burden of 8.32% and Texas ranks 32nd with 8.2%.

    So states just differ on their ways of collecting taxes, seems more like a dealer's choice than necessarily a great break for us one way or another. But there are certainly worse states than others. New York (12.28%) and Hawaii (11.48%) are the worst. While Delaware (5.52%) and Alaska (5.16%) are the best.

    Seems you are right about in the middle tax wise overall. If this article is to be believed data wise.