Comparing federal, state and global tax burdens

Where you live and the types of taxes collected there determine whether your tax bill goes up or down. (Photo by Annamaria Kupo on Unsplash)

The annual income tax filing season generates a lot of talk about moving. Few of us actually pack boxes and load up vans as soon as we send the Internal Revenue Service our 1040s, but we do contemplate what it would be like to live in a lower-tax locale.

People in high-tax states explore possible relocation to a lower- or no-tax domestic jurisdiction. Some more peripatetic taxpayers look abroad.

But there's more to consider than just income taxes. Tax collectors always find a way to get their cut.

Here in Texas, we don't have an income tax. But four Lone Star State metropolitan areas were in the top 15 American cities with the highest property taxes, according to a recent report by Construction Coverage.

The greater Dallas-Fort Worth area came in sixth. Metro Houston was on DFW's heels at number seven. The San Antonio area ranked 10th. Here in Austin, our real estate taxes put us at unlucky number 13.

State tax burdens: Property taxes were part of the equation used by personal finance website WalletHub in its examination of state tax burdens.

To determine which residents face the largest tax burdens, WalletHub compared the 50 states across the three most common state tax types — property taxes, individual income taxes, and sales and excise taxes — as a share of total personal income in the state.

If you want to pay less, then it's north to Alaska for you. The overall tax burden in The Last Frontier is 5.06 percent of your income, according to the WalletHub report. If you prefer the Empire State, then you'll pay a lot more in taxes. New York's tax burden is almost 12.5 percent of your earnings.

Following New York's 12.47 percent tax burden to round out the top 10 taxing states are Hawaii at 12.31 percent; Maine at 11.14 percent; Vermont at 10.28 percent; Connecticut at 9.83 percent; New Jersey at 9.76 percent; Maryland at 9.44 percent; Minnesota at 9.41 percent; Illinois at 9.38 percent; and Iowa at 9.15 percent.

Joining Alaska in the lower tax burden top 10 are Delaware at 6.12 percent; New Hampshire at 6.14 percent; Tennessee at 6.22 percent; Florida at 6.33 percent; Wyoming at 6.42 percent; South Dakota at 6.69 percent; Montana at 6.93 percent; Missouri at 7.11 percent; and Oklahoma at 7.12 percent;

Paying, or not, to go global: If you think moving to another country will help your tax liability, you have lots of choices, according to this year's World Population Review survey of tax regimes of more than 150 countries.

Bahamas, Bahrain, Bermuda, Brunei, Cayman Islands, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates all have no income taxes.

Go to the World Population Review's interactive map for more.

Those are much more appealing tax choices than the 10 countries that collect 50 percent or more on income. They are Belgium, Israel, and Slovenia with 50 percent income tax rates; Aruba and Sweden at 52 percent; Austria, Denmark, and Japan at 55 percent; Finland at 56 percent; and Ivory Coast topping the income tax table with its 60 percent rate.

But, as with the 50 United States jurisdictions, there are other ways countries collect revenue.

Bhutan collects a 50 percent sales tax. Ten more, including otherwise inviting places like Greece and Portugal (my choices; I like the sun and sea), have sales tax rates of more than 20 percent.

Then there are business taxes if you're thinking of moving your company. Puerto Rico's 37.5 percent rate leads here. The lowest corporate tax rate is 5.5 percent in Barbados. And some countries, including Bahrain, Bermuda and Vanuatu, have no corporate tax at all.

If you're considering tax-related relocation, get out your maps and calculator.

You also might find these items of interest:

• It's state tax filing time, too
• Idaho will become 10th individual flat-tax state in 2023
• United States is mid-pack in global tax system rankings 

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