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| Nashville, Tennessee, at dusk. |
Thus using a subset of their data, I produced alternative ways to look at the USNWR data.
The other day, I saw a work on 24/7 Wall St. titled, How Much the Average Income Nets You After Taxes in Every State. The reported data on after-tax income seemed close but what struck me was their lack of accounting for the cost of living in each state.
At day's end, it is how much you can buy with the income you have left over that counts the most. So with that in mind, I give you the following tables and a ranking of the states, from best to worst, based on the rankings of buying power at various incomes.
The ranking method I use on the True Dollar Journal is this: How much buying power does one have left relative to pre-tax earned income after lawgivers put their hands on that income.
The data includes income taxes paid to Congress, so-called federal income taxes, as well as income taxes paid to states' lawgivers in those states that levy income taxes.
You will notice that states' lawgivers are competitive with each other over the amount of income they will tax. Yet, once buying power comes into play, many states become punitive in which to live and earn a living.
As to the stats, buying power income after-tax is fairly straight forward. The after-tax income gets run through a formula using a state-specific cost of living adjuster.
A pre-tax wage rate get shown because for many, they know what they earn per hour but likely do not know what they earn per year.
The buying power income to pre-tax income is likely the best measure to rank states by income and taxation as it is the equivalent of one's keep after a state-specific cost of living adjustment.
Keep from each dollar earned is the ratio of after-tax income to pre-tax income. It is the amount with which anyone reckons in their personal accounting.
The BPI to BPI states average merely looks at the BPI for a state relative to the average of BPI for all states. In a way, it shows a premium one pays to live in a state for scores below 1.00 and shows that one is being paid to live in states where the scores are above 1.00
The overall ranking of states is at the bottom.
Average Income
The average income wage rate in each state likely translates to the pay of simi-skilled laborers with ten years experience or the typical government worker with a high school diploma.Here is a visual take on BPI to Pre-tax income for Average Income.
In what will be a recurring theme to come, Hawaii and California are the worst states in the USA for letting you keep what is yours and for having high prices on the things needed to live. At the same time, other states, will surprise many.
Minimum Wage
There has been a push for a long time to raise the federal minimum wage to $15 an hour. Yet in some states, mandated minimum wage already is higher than the federal minimum wage.$30 an Hour
$45 an Hour
$60 an Hour
Two Times the Average Income
Who Wants to Be a Millionaire?
The worst states for taxation and buying power become progressively worse once someone earns a million dollars a year.
Such an income might seem out of reach for many, but some earn at least one million a year.
Such an income might seem out of reach for many, but some earn at least one million a year.
Overall Ranking
It might surprise many that Tennessee comes in first and ranks above popular states like Texas and Florida. Like those states, the lawgivers of Tennessee do not levy a state income tax.The relatively low cost of living combined with no state income tax that pushes up Tennessee to the top.
Looking at the map, it becomes clear. The states of the south central USA are the best states in which to live if you would like to get ahead in life by getting more fruits from your labor. Perhaps, the South Central states are the best run states.
Overall, the worst states in which to live seem to be where the Democratic party controls the states legislatures.
And it should fail to surprise what states are the worst: Hawaii, California, Massachusetts, Connecticut, New York, Alaska, New Jersey, Rhode Island, New Hampshire and Oregon, along with the District of Columbia.
Of the worst states, eight are long-time Democratic Party strongholds. The states have overly high-paid government workers, outsized pensions for government workers and piles of onerous regulation.
If you were to search for news stories about these states and taxation, you would find the general sentiment of residents to be negative.
In another work here on the True Dollar Journal, Head West, Er, and South Young Man. The Great Sort Continues. USA Residents Moves, 2011-2018, I revealed five-year moving trends for the USA.
Those trends reveal that in general, people continue to escape higher-tax, higher-cost states such as Rhode Island, Illinois, Massachusetts, New Hampshire, Maine, California, Minnesota, Maryland, New York, Connecticut, New Jersey.
Likely, some flee other states because of a lack of opportunity, states like
Louisiana, Arkansas, Missouri, Kentucky, West Virginia, Oklahoma.
Still others flee farm states like Wisconsin, Iowa, Kansas, Ohio, Pennsylvania, Michigan, North Dakota looking for warmer climates.
Relocation Strategy
Of course income is not everything. Some like the outdoors and specifically beaches or mountains or access to ocean sailing. Others like hot and humid. Still others like hot and dry. Some like to skii or snowboard as often as they can for as long as they can for much of the year.
Considering one's preferences, one could look for metros within the higher rated states in which one can work.
Considering one's preferences, one could look for metros within the higher rated states in which one can work.
Gab It
