Tax Freedom Day 2009: Pick Your State Carefully

The Tax Foundation recently released their 2009 Tax Freedom Day Study.  It measures how many days the average worker must work to  pay taxes. There is a wide disparity among states. The tax burden you bear can significantly impact your quality of life.

The Best State for Tax Freedom is Alaska where it takes 82 days almost 25% of the year just to pay taxes.  Louisiana, Mississippi, South Dakota, North Dakota and West Virginia are also rated Best States for Tax Freedom.  If you are not retired, these states would be considered as candidates for Best States to Work.

The Worst State for Tax Freedom is Connecticut where it takes 120 days or until April 30 to pay taxes.  If you live in Connecticut 1/3 of your time every year goes to pay taxes to the Federal, State and Local governments.  That is almost 50% more days than Alaska.  New Jersey, New York, California and Maryland are also rated Worst States for Tax Freedom.

According to the Tax Foundation study, five major categories of tax dominate the tax burden. Individual income taxes, both federal and state, require 38 days’ work. Payroll taxes take another 27 days’ work. Sales and excise taxes, mostly state and local, take 15 days to pay off. Corporate income taxes take 6 days, and property taxes take 12. Americans will log 4 more days to pay other miscellaneous taxes, most notably including motor vehicle license taxes and severance taxes, and about 1 day for estate taxes.

What state you live in is very important in determining your lifestyle as higher cost of living states tend to have higher tax burdens.  Lower disposable income is the result.  Many states are also increasing many taxes due to economic conditions which will increase tax burdens.  Noteworthy examples are the proposed increases in New York and California that will make these heavily burdened states more undesirable to live.  If you are not retired, New York and California would have to be considered as 2 of the Worst States to Work.

Tax
State Days Freedom Day
1 Alaska 82 23-Mar
2 Louisiana 87 28-Mar
3 Mississippi 87 28-Mar
4 South Dakota 88 29-Mar
5 North Dakota 91 1-Apr
6 West Virginia 91 1-Apr
7 Alabama 92 2-Apr
8 New Mexico 92 2-Apr
9 Montana 93 3-Apr
10 Kentucky 93 3-Apr
11 Oklahoma 94 4-Apr
12 Iowa 94 4-Apr
13 South Carolina 94 4-Apr
14 Arkansas 94 4-Apr
15 Tennessee 95 5-Apr
16 Wyoming 95 5-Apr
17 Missouri 96 6-Apr
18 Maine 96 6-Apr
19 Texas 96 6-Apr
20 Nebraska 98 8-Apr
21 Kansas 98 8-Apr
22 Nevada 98 8-Apr
23 Indiana 98 8-Apr
24 Florida 99 9-Apr
25 Oregon 99 9-Apr
26 North Carolina 99 9-Apr
27 Michigan 100 10-Apr
28 Arizona 100 10-Apr
29 New Hampshire 100 10-Apr
30 Ohio 101 11-Apr
31 Delaware 101 11-Apr
32 Vermont 102 12-Apr
33 Idaho 102 12-Apr
34 Georgia 102 12-Apr
35 Colorado 102 12-Apr
36 Illinois 103 13-Apr
37 Hawaii 103 13-Apr
38 Utah 103 13-Apr
39 Wisconsin 103 13-Apr
40 Pennsylvania 104 14-Apr
41 Rhode Island 104 14-Apr
42 Minnesota 105 15-Apr
43 Washington 106 16-Apr
44 Massachusetts 106 16-Apr
45 Virginia 106 16-Apr
46 Maryland 109 19-Apr
47 California 110 20-Apr
48 New York 115 25-Apr
49 New Jersey 119 29-Apr
50 Connecticut 120 30-Apr

Source: Tax Foundation, Tax Freedom Day

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State Unemployment Up Everywhere in Feb, Michigan tops 12% Unemployed

The February 2009 State Unemployment numbers were released this past week and they were not pretty. Every state in the U.S. saw its unemployment rate increase.

Bureau of Labor Statistics (BLS)  also released March Unemployment, along with Feb state data, and the nationwide unemployment rate increased again to 8.5% nationwide.  It was 8.1% in February.

Seven States had unemployment above 10% in February.  Michigan was the Worst State for Jobs with a whopping 12% unemployment number.  South Carolina, Oregon, North Carolina, California Rhode Island and Nevada also qualify as Worst States for Employment as the 6 other states with unemployment above 10% .

The Best State for Jobs based on a low 3.9% unemployment is Wyoming. 4 other states qualify as Best States for Employment with rates still below 5%.  They are:  Nebraska, North Dakota, South Dakota and Iowa.

Some of the state year on year changes are quite large.  Unemployment increased by over 100% from last year in Hawaii and Oregon for example.  Of the large states, Texas is holding up the best with unemployment of only 6.2% in February which was below the U.S. Feb average of 8.1%.

State data is released with a one month lag so expect March state unemployment to get even worse as unemployment increased nationwide in March by .4%.

State Feb-08 Feb-09 Change
1 Michigan 7.4 12 4.6
2 South Carolina 5.7 11 5.3
3 Oregon 5.4 10.8 5.4
4 North Carolina 5.2 10.7 5.5
5 California 6.2 10.5 4.3
6 Rhode Island 6.5 10.5 4
7 Nevada 5.5 10.1 4.6
8 District of Columbia 6.1 9.9 3.8
9 Florida 5.2 9.4 4.2
10 Indiana 5 9.4 4.4
11 Ohio 5.9 9.4 3.5
12 Georgia 5.4 9.3 3.9
13 Kentucky 5.6 9.2 3.6
14 Mississippi 5.9 9.1 3.2
15 Tennessee 5.5 9.1 3.6
16 Illinois . 5.9 8.6 2.7
17 Alabama 4.1 8.4 4.3
18 Washington 4.7 8.4 3.7
19 Missouri 5.5 8.3 2.8
20 New Jersey 4.7 8.2 3.5
21 Minnesota 5 8.1 3.1
22 Alaska 6.5 8 1.5
23 Maine 4.9 8 3.1
24 Massachusetts 4.6 7.8 3.2
25 New York 4.6 7.8 3.2
26 Wisconsin 4.5 7.7 3.2
27 Pennsylvania 4.8 7.5 2.7
28 Arizona 4.5 7.4 2.9
29 Connecticut 5.2 7.4 2.2
30 Delaware 4 7.4 3.4
31 Colorado 4.5 7.2 2.7
32 Vermont 4.4 7 2.6
33 Idaho 3.9 6.8 2.9
34 Maryland 3.7 6.7 3
35 Arkansas 4.8 6.6 1.8
36 Virginia 3.5 6.6 3.1
37 Hawaii 3.1 6.5 3.4
38 Texas 4.5 6.5 2
39 Montana 4 6 2
40 West Virginia 4.2 6 1.8
41 Kansas 4 5.9 1.9
42 Louisiana 3.8 5.7 1.9
43 Oklahoma 3.2 5.5 2.3
44 New Mexico 3.8 5.4 1.6
45 New Hampshire 3.7 5.3 1.6
46 Utah 3.3 5.1 1.8
47 Iowa 3.9 4.9 1
48 South Dakota 2.7 4.6 1.9
49 North Dakota 3 4.3 1.3
50 Nebraska 3 4.2 1.2
51 Wyoming 2.8 3.9 1.1
p = preliminary.

Source: Bureau of Labor Statistics

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Cost of Living by State, Tennessee the Best, Hawaii Worst

The Missouri Economic Research and Information Center (MERIC) has some valuable information on the the cost of living for each State.

The Best States for Cost of Living are Tennessee, Oklahoma, Nebraska, Missouri and Arkansas.

The Worst States for Cost of Living are Hawaii, DC, California, New Jersey and Alaska.

Map below for cost of living is courtesy of MERIC.

The Best States for Housing Costs are Oklahoma, Tennessee, South Dakota, Texas and Missouri.

The Worst States for Housing Costs are Hawaii, DC, California, Maryland and New Jersey.

If you are looking for the Best State to Retire, the cost of living is a very important consideration.  If you want to stretch your dollar, look to the Southeast and Midwest and stay away from the North East.  Hope this helps.

Cost of Living Annual Map

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State Unemployment Up in Every State in the Union, Wyoming Best, Michigan Worst State

State Unemployment Up in Every State in the Union, Wyoming Best, Michigan Worst State

State Unemployment Up in Every State of the Union

Michigan Surges to 10.6%.  Wyoming has lowest unemployment in nation at 3.4%.  Rhode Island  is the only other state with over 10.0%. California at 9.3% leaves millions of Californians unemployed. 

Texas was the only state that recorded a statistically significant year on year increase in the number of people working.  Employment increased by 153,000.   The largest statistically significant month over month decreases in employment were experienced in California (-78,000), Michigan (-59,000), New York (-54,000) and Illinois (-36,000).  Losing states show up in a number of areas for being unattractive to business.  See some of our other posts for info on state tax burdens, unionionization rates and attractiveness for business.

If you are looking for a job, the low unemployment states may provide work but you must be careful to understand the kind of industries and work that is available for your skill sets.  Most states have differing industries and worker needs.  Unemployment for December 2008  is listed below for all 50 states and District of Columbia.  The national unemployment rate is now at 7.2%

     Rank       State                                                                                                                                                                  

1 WYOMING 3.4
2 NORTH DAKOTA 3.5
3 SOUTH DAKOTA 3.9
4 NEBRASKA 4.0
5 UTAH 4.3
6 IOWA 4.6
6 NEW HAMPSHIRE 4.6
8 NEW MEXICO 4.9
8 OKLAHOMA 4.9
8 WEST VIRGINIA 4.9
11 KANSAS 5.2
12 MONTANA 5.4
12 VIRGINIA 5.4
14 HAWAII 5.5
15 MARYLAND 5.8
16 LOUISIANA 5.9
17 TEXAS 6.0
18 COLORADO 6.1
19 ARKANSAS 6.2
19 DELAWARE 6.2
19 WISCONSIN 6.2
22 IDAHO 6.4
22 VERMONT 6.4
24 ALABAMA 6.7
24 PENNSYLVANIA 6.7
26 ARIZONA 6.9
26 MASSACHUSETTS 6.9
26 MINNESOTA 6.9
29 MAINE 7.0
29 NEW YORK 7.0
31 CONNECTICUT 7.1
31 NEW JERSEY 7.1
31 WASHINGTON 7.1
34 MISSOURI 7.3
35 ALASKA 7.5
36 ILLINOIS 7.6
37 KENTUCKY 7.8
37 OHIO 7.8
39 TENNESSEE 7.9
40 MISSISSIPPI 8.0
41 FLORIDA 8.1
41 GEORGIA 8.1
43 INDIANA 8.2
44 NORTH CAROLINA 8.7
45 DISTRICT OF COLUMBIA 8.8
46 OREGON 9.0
47 NEVADA 9.1
48 CALIFORNIA 9.3
49 SOUTH CAROLINA 9.5
50 RHODE ISLAND 10.0
51 MICHIGAN 10.6

Source:  Bureau of Labor Statistics

People Leave NY and Illinois for 32 Straight Years!!! People choose Best states with their feet.

Choosing where to live is complicated.  When you choose a state to live, it must be the Best State for your needs.  If a state has inward moves i.e. positive migration,  there must be enough positive factors to create that movement.  United Van Lines recently released its 2008 “migration study.”  It has done so for 32 years.  The “People’s Choice Award for Best and Worst States” are

Best States (Most Inward Moves)

1.  Washington DC
2.  Nevada
3.  North Carolina
4.  Alabama
5.  Wyoming
6.  South Dakota
7.  South Carolina
8.  Oregon

Worst States (Most Exits from State)

51.  Michigan
50.  North Dakota
49.  New Jersey
48.  Pennsylvania
47.  Rhode Island
46.  Illinois
45.  Indiana
44.  Maine
43.  New York

According to United, New York and Illinois have seen more exits for 32 straight years!!!  I wonder if the political folks are wondering why companies and people keep moving away.  Northern States dominate Net Exits.  Nevada has had 23 consecutive years of inward moves and Oregon has had 21 years.  Florida, California and Texas were considered balanced states.

For more info go to United’s website:  http://www.unitedvanlines.com/mover/united-newsroom/press-releases/2008/2008-united-van-lines-migration-study.htm

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Best and Worst States for Entrepreneurs

The Small Business and Entrepreneurship Council in December released its 13th annual “Small Business Survival Index for 2008:  Ranking the Policy Environment for Entrepreneurship across the Nation.”

The Best and Worst Sates for Entrepreneurs are:

  Best                                                   Worst

1.  South Dakota                                51.  Washington DC
2.  Nevada                                         50.  New Jersey
3.  Wyoming                                      49.  California
4.  Florida                                          48.  Maine
5.  Washington                                  47.  Rhode Island

The study covers a broad area of policy matters from tax to regulation and is full of great info.  It can be found on the home page of the Council at:

www.sbecouncil.org/home/index.cfm 

If you are thinking of starting a business or want to work in a state that fosters small business check it out.