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Taxation Driving Relocation

June 21, 2021

The average American will pay $525,037 in taxes over their lifetime, according to a new study by financial technology company Self.

For the purposes of the study, income taxes, state and local taxes, property taxes, sales taxes, and taxes on automobiles are included (inheritance taxes were excluded as most Americans don’t pay them). The report says this amount represents about 34.3% of lifetime earnings for the average American, with nearly two-thirds of the tax burden being levied on earnings.

Interestingly, the lifetime total taxes paid varies greatly by state. The highest-taxed state was New Jersey, where residents will pay an average of $931,698 of taxes over their lives, or 49.51% of lifetime earnings.

The top ten most expensive areas are New Jersey, Massachusetts, Connecticut, Washington D.C., New Hampshire, Rhode Island, New York, California, Maryland, and Illinois.

The lowest overall tax burdens were Indiana, Tennessee, Kentucky, New Mexico, Oklahoma, Louisiana, Montana, Arkansas, Alabama, and West Virginia.

All the most expensive states are controlled by Democrats and have Democratic governors. On the other hand, all but one of the least expensive states are controlled by Republicans and have Republican governors. Many financial media sources picked up on the story and ran with it, including Yahoo, Bloomberg, the Wall Street Journal, the Fiscal Times, and USA TODAY, yet none bothered to point out the political connection between the most- and least-taxed states.

But Americans who live in these high-tax states know. They’re moving out of the high-tax states in favor of low-tax states like Texas, Florida, and others with no state income tax. It’s a real problem for the high-tax states and they know it.

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