America’s Tax Haven–No Income, Sales or Property Taxes

No New Taxes!

Yes, you read that right, there are only a few small areas left in the U.S. where you can enjoy no state or local income taxes, state or local sales taxes and no local property taxes . . . can you guess where?  New Hampshire, of course! 🙂

First, the list gets really small quickly when you consider only two states have no state-level income or sales tax–Alaska and New Hampshire.  However, Alaska allows localities to levy their own sales tax (known as a local option sales tax).  According to the Tax Foundation’s State Business Tax Climate Index (pdf), the weighted-average of Alaska’s local sales tax yields an equivalent state-wide rate of 1.11 percent.

So that leaves New Hampshire in the no state or local income and sales tax pole position.  But wait there’s more . . . there are areas of New Hampshire where there are no local property taxes.  You can see from this data from the New Hampshire Center for Economic Policy that there are 19 unincorporated areas with a property tax mill rate of zero–I’ve also plotted them into a Google map below (you may need to zoom out).

There are also other areas that are unincorporated and have a close to zero property tax mill rate.  The most famous is probably Hale’s Location where they tout the “Hale’s Location Country Club Estate: Lakefront to Mountain side and all the fairways in between!” The 2010 property tax mill rate in Hale’s Location was only 3.04.  And there are 10 other places with single digit mill rates.

Of course, there is a catch.  Many of these places are remote and/or mountainous with few people.  Neither homes nor land come up for sale very every often and when they do they command a price premium.  Yet, there may be hope to snag some property as one of my favorite places, Millsfield, New Hampshire (adjacent to the amazing Balsams resort) which has a mill rate of zero, has this property for sale–400 acres for $1 million.  Surely there is a developer out there waiting to create the next Hale’s Location Country Club Estate.  Anyone?

Finally, recent developments in New Hampshire have resulted in the enactment of a state-wide property tax stemming from a ruling by the State Supreme Court on education funding–really it’s a back-door plot to getting an income or sales tax, but I digress.  The rate in 2010 was set at 2.19 mills, so it’s not too onerous.  This is the only thing preventing a full sweep of the big three taxes in these locations.

View New Hampshire Tax Havens in a larger map

Happy Canadian Tax Freedom Day . . . June 6, 2011

The good news is that Canadians will celebrate their Tax Freedom Day on Monday, June 6, 2011 . . . the bad news is that they will celebrate Tax Freedom Day on Monday, June 6, 2011.

It’s amazing what a difference in tax burdens that 70 short miles can make–the distance from my house to the Canadian border.  According to the Tax Foundation, New Hampshire taxpayers celebrates their Tax Freedom Day (April 9) almost two months earlier than the average Canadian.

And, of course, no celebration would be complete without a new Remy tune:

Economic Freedom and Economic Progress

Philadelphia Liberty Bell 2
Creative Commons License photo credit: Alotor

Matt Mitchell over at Mercatus’s blog, Neighborhood Effects, has been examining the usefulness of various freedom indices and their ability to predict economic progress.  His conclusion in particular caught my eye:

The two indices with the best record for predicting economic progress were the Economic Freedom of North America index by Fraser (“the strongest and most robust evidence”) and the State Business Tax Climate by the Tax Foundation. Looking at the Fraser index, they found that moving a state from the 40th to the 10th place in terms of economic freedom “would increase the rate of growth of employment by 0.317 percentage point.” Given that the mean employment growth rate is 1.15 percent, this amounts to about 30 percent faster employment growth.

Not to toot my own horn . . . OK, I’m going to toot my own horn, but my wife and I were the original co-creators of the Tax Foundation’s State Business Tax Climate Index.  The vast majority of which has remained unchanged from the first few editions that we published.


Tax Freedom Day 2011

US Capitol Building
Creative Commons License photo credit: bclinesmith

Today the Tax Foundation released their 2011 edition of Tax Freedom Day.  Unfortunately, America’s taxpayers will have to wait another 13 days to celebrate Tax Freedom Day which falls on April 12.  Additionally, the study goes on to note the role that the enormous federal deficit plays in Tax Freedom Day.  The measure does not include include the deficit because that money comes from borrowing rather than taxation.  Yet, had taxes been raised to cover the deficit then, nationally, Tax Freedom Day would have arrived 41 days later on May 23.  Ugh!

In the meantime, Congress is bickering over whether to cut the budget by $60 billion or $30 billion.  Really?!

The State of America’s Private Sector XVI: Illinois Edition

Last week a massive, massive tax increase was announced in Illinois–did I mention that is was massive?  The details of the Illinois tax increase, according to the Chicago Tribune, are as follows:

Under the proposal, the state’s 3 percent personal income-tax rate would rise to 5.25 percent for four years, then fall to 3.75 percent. All told, that’s a 75 percent increase.

The personal income-tax hike is expected to net the state roughly $6.2 billion, and a corresponding corporate income tax increase could raise an additional $1 billion, Cullerton said. The rate businesses pay would temporarily jump from 4.8 percent to 8.4 percent.

The cigarette tax increase, which is expected to raise $377 million, would go into what was described as a “lock box” to increase education funding. Lawmakers said they hoped to double that amount using other funds to provide more than $700 million in new school funding this spring.

To gain votes for the package, the plan also would provide $325 in property tax credits to homeowners this year and a direct check to taxpayers in subsequent years.

As a measure of how desperate state government’s finances are, Cullerton said the state would use the income-tax hike to borrow $12.2 billion. Of that, $8.5 billion would pay overdue bills and $3.7 billion would cover a government worker pension payment lawmakers skipped when putting together the current budget, he said.

Using the relationship that shows the public sector crowds-out the private sector, I recently showed that two other modest tax increase proposals (modest is relative) would impose a significant cost on Illinois.  I’ve estimated that under this proposal Illinois’s economy could suffer a $17.3 billion reduction in personal income over the next three to five years as a result of this tax hike, translating into $3,625 less in personal income per household or the loss of 288,473 private sector jobs. Adding insult to injury, the average Illinois household also faces an increase in their state tax burden of $1,598.

The Tax Foundation also finds that this is a very bad deal for Illinois’s business tax climate.  They have also found that Illinois would also sport the “highest state corporate income tax in the United States and the highest combined national-local corporate income tax in the industrialized world.”  Yikes!

There will also be higher crime due to increased cigarette smuggling stemming from the higher cigarette tax.

If you live in Illinois and are wondering how much this tax hike will cost you . . . check out this tax calculator from the good folks at the Illinois Policy Institute.