It is important to pay your taxes because it is the state’s main resource to fund its government project. This is why not paying your income tax is a federal crime in MOST states. But is some states like Nevada, Texas, and Alaska, not having to pay your income tax is a privilege accorded by these “no income tax state” to its people.
How Does This No-Tax-Policy Work?
It is a general knowledge that without taxes the state will be left powerless because it would have no means by which to mobilize its programs. A no-income-tax state does not collect income tax from the people, but instead, it funds its programs through the money they raise from various other taxes like property tax, or sales tax.
States like Texas and Alaska fund themselves from the profit they earn from oil and natural gas production. While states like Florida, who draws in thousands of tourists, capitalize on property taxes instead.
Is Living In A No-Income-Tax State Great?
If you are just starting out and is looking for a place to find work where you would be able to keep most of your income then moving in to these states is a good thing. Here, you would be able to save more money since the state will not be biting a huge chunk off of your pay slip. All you need is to find a cheap place to live in and you would be able to save enough money to finally buy the things that you want.
Furthermore, if you are a corporation who wishes to gain more revenue by cutting down on costs, transferring your operations to states that do not take away a large portion of your revenue is a good thing. Moving in to Nevada would be a good choice since they won’t collect any corporate income tax from you.
But the world is not a wish granting factory and there simply is no place in the world where everything is free. These states may not bite into your pay slips, but they’ll surely nibble holes on the other parts of your wallet. You just may have to spend more on increased property taxes than on income taxes.
So before making the life changing decision of moving to any of the states without income tax, make sure that you have everything planned so that you will be able to make the most out of what you earn.