Femme Frugality kindly invited me, Mrs PoP, over to her site to talk about income taxes, since Mr. PoP and I tend to look at income taxes from a uniquely frugal person's perspective. Thanks so much, Femme! Remember the old saying, "There's nothing as certain as death and taxes"? Well, that might not be quite so true. No, we haven't yet found the fountain of youth - though we are celebrating the 500th anniversary of Ponce de Leon's search for just that in Florida this year. Since his search failed, death is still a certainty. So that means it's taxes that are less certain than many would have you believe. A disclaimer - I'm not here to talk about U.S. federal taxes. In the U.S, we're all subject to those federal taxes (FICA, income, estate, etc.) equally*. The uncertainty in taxes comes when we start looking at state and local taxes that can vary pretty dramatically based on where you live.
Two Main Types of Local Taxation
- Taxes based on your income - these are taxes on your wages, interest, dividends, etc. or
- Taxes that are based on your consumption levels - think sales tax, property tax, or car registration fees
Taxes on Income
Taxes on Consumption
Not Mutually Exclusive
Taxes From a Frugal Perspective
|Proof of that Kitty PoP is utterly dependent on us -|
He crawled down a pair of Mr. PoP's pants and got stuck!
It's Not Just Florida!
Let's Look At Some Numbers
- Florida: $0
- California: $11,811
- New York: $10,775
- New Jersey: $8,555
- Colorado: $8,519
- Arizona: $6,048
- Pennsylvania: $5,520
The Moral of the Story
How much are you paying in state income taxes? Would you consider moving to a state that had lower tax rates or a more "choose your own adventure" approach to taxation?
* By equally I mean we all play by the same tax rules for federal taxes. Don't need to provoke any political discussions here...
*FF note: Thanks so much for contributing, Mrs. PoP! Such a great article with so much information---I originally asked Mrs. PoP to guest post because I had no idea that some states had 0% income tax! The City of Pittsburgh has the highest locality tax I've ever had to pay at 3%, and this is the first year our state taxes have eclipsed that rate at 3.7% income. Looking at the compared stats I guess I shouldn't be complaining! Now if we could just get the city to plow our roads every once in a while...*