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Why do some states require State Income taxes and others don't? |
What are the pros and cons of this disparity among our States? All states generally have available a three prong approach to taxing us. Those three taxes are property tax, income tax, and sales tax. There are a few other options such as the lottery or taxing other forms of gambling or charging user fees such as for licenses, or things like inheritance taxes, excise taxes, etc. If a state doesn't have a state income tax such as Nevada, you can count on the fact that the government is taxing you somewhere else. In the case of Nevada where I now live, we have taken the "ill" out of illegal (making it 'legal') and tax gambling and prostitution to help our state coffers out. If we also had an income tax, I'm sure our state could still find a way to spend all the money, but fortunately of the tree big taxes we only have two of them, sales tax and property tax. Fortunately there is also no sales tax of food, so even our sales tax is more 鈥減rogressive鈥?meaning that the people who pay the tax have the ability to pay more tax because they make more money and theoretically receive more tax benefit as they pay their 鈥渇air share鈥?of the tax burden. This tax structure also means a lot of wealthy retire here (No state inheritance tax). Your own state has devised a method to tax you that they hope is equitable. I have also lived in Oregon and felt the sting of heavy income taxes because the state refuses to charge a sales tax. Of course we all know that Oregon is the same place where you can鈥檛 pump your gas because it employees more people, go figure, they get more income tax from these workers. Understand your question and have researched taxing as a legislator trying to fund government, but I sure don鈥檛 have all the answers since each states taxing structure is unique to them. Good luck in your quest. States without income tax make it up on property tax or sales tax. States decide how they want to raise revenue to pay for things like schools, roads, stadiums, parks, public transportation, etc. The revenue required must meet the annual budget. They can decide which is the best way to raise that revenue. The tools are income tax, sin tax, property tax, sales tax, use tax, and visitor tax.... to name a few. The politics of the area generally dictates which of the taxes they want to use and how high the rates are. In general, a state with no income tax has other taxes that are higher to compensate. |
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