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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • State Of Bliss 17 comments
    Aug 28, 2013 5:58 PM

    Bliss, for my purposes, is defined as low taxes and sensible public policy. If you had no business or familial commitments, where would be the perfect state in which to live? My first plan was to winter in inner city Detroit and summer in one of the many half-abandoned condo forests in Florida (doubtlessly making us the first inner city Detroit family to use winter as a verb). I calculated that we could take Florida residence for tax purposes and rent out our homes while we were gone for an amount greater than the necessary mortgage servicing. We would be living for free. What's more, Detroit real estate has been a terrific investment since the bankruptcy filing, appreciating by over 20% on the expectation that there was little left to lose. My first efforts at achieving real estate bliss ran into some opposition from my wife who stated delicately but forcefully that she did not plan on joining me at either locale.

    Plan B was Texas in the winter and Alaska in the summer, for daylight and not too much heat in the summer and state income tax avoidance year round. This got a somewhat warmer reception than my inner city Detroit/Florida half-abandoned condo forest scheme, but still did not pass the finish line. My bride is less consistently misanthropic than I am. I prefer a few hundred miles between me and my neighbors (they probably do too) but she wanted some more company than these states offer, at least in my favorite spots.

    Tahoe on the Nevada side is a gem, but the gaming industry presence is seedy and depressing. It is a shortcoming, but people losing money that they cannot afford makes me feel bad. I am happy to invest in it, but not something I want to live around.

    The current idea is to earn in state income tax free Wyoming and spend in next door sales tax free Montana.

    Wyoming is one of the states without income tax:

    It is next door to Montana, one of the states without sales tax:

    It is also an extremely attractive state, nationally recognized as one of the top ten states for scenery:

    US STATES MAP

    One of the easiest, objective criteria is crime (one can quibble over the attractiveness of many characteristics, but crime is a pretty objective negative). Wyoming crime is very low:

    Wyoming public policy is quite conservative and market-oriented. It is unlikely to lead to radical public policy changes in the future. As a rough proxy for public policy predictability, here is their latest Electoral College composition by county:

    Wyoming will remain solvent long after California, Illinois, and Connecticut jack up taxes further and seek federal bailout money to reward themselves for their fiscal profligacy.

    Besides lacking a state tax on personal or corporate income, Wyoming has many other tax advantages. There is essentially no state inheritance tax. There is no state gift tax. There is no tax on out of state retirement income. There is no excise tax. There is no tax on mineral ownership. There is no intangible tax. There is no tax on real estate sales. A dynasty trust administered in the state shields real estate from federal estate tax for up to a thousand years. Property taxes are low.

    A recent survey names Wyoming,

    "a model of good management and a prospering population. The state is particularly efficient at managing its debt, owing the equivalent of just 20.4% of annual revenue in fiscal 2010. Wyoming also has a tax structure that, according to the Tax Foundation, is the nation's most-favorable for businesses - it does not have any corporate income taxes. The state has experienced an energy boom in recent years. The mining industry, which includes oil and gas extracting, accounted for 29.4% of the state's GDP in 2011 alone, more than in any other state. As of last year, Wyoming's poverty, home foreclosure, and unemployment rates were all among the lowest in the nation."

    According to Tax Foundation, Wyoming's 2010 tax burden of 7.77% ranks 5th lowest out of 50 states, and is below the national average of 9.9%. Wyoming's taxpayers pay $3721 per capita in state and local taxes. Wyoming ranks 1st in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes, and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Montana, 8th, South Dakota, 2nd, Nebraska, 31st, Colorado, 18th, Utah, 10th, and Idaho, 20th. Wyoming levies no individual income tax, joining seven other states with the same policy: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Wyoming levies no corporate income tax, joining three other states with the same policy: Nevada, South Dakota, and Wyoming. Wyoming levies a 4% general sales or use tax on consumers, which is below the national median of 6%. The average local sales tax rate is an additional 1.34%. Wyoming's state and local governments collect $1719 per person in general sales taxes and $214 per person in excise taxes, for a combined figure of $1932, which ranks 3rd highest nationally. Wyoming's gasoline tax stands at 14¢ (2nd lowest nationally), while its cigarette tax stands at $0.6 (12th lowest nationally.). Want to avoid Wyoming sales taxes? Shop in nearby Montana. Montana levies a 0% general sales or use tax on consumers, which is below the national median of 6%. Montana's state and local governments collect $0 per person in general sales taxes and $546 per person in excise taxes, for a combined figure of $546, which ranks 3rd lowest nationally. Montana's gasoline tax stands at 27.8¢ (22nd highest nationally), while its cigarette tax stands at $1.7 (16th highest nationally.).

    Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2013, Wyoming taxpayers worked until April 16th (17th latest nationally) to pay their total tax bill. The Tax Freedom Days of neighboring states are: Montana, April 10th (ranked 19th earliest nationally); South Dakota, April 4th (ranked 6th earliest nationally); Nebraska, April 12th (ranked 23rd earliest nationally); Colorado, April 17th (ranked 16th latest nationally); Utah, April 13th (ranked 24th earliest nationally); and Idaho, April 9th (ranked 15th earliest nationally).

    Sadly, workers in my state of Connecticut are indentured servants for the state through the first half of May and only start working for themselves and their families around Memorial Day. Wyoming workers are able to work and save on their own behalf for almost a full extra month each year. This represents a spectacular potential to generate and compound wealth over the long-term:

    Wyoming is also in the top 10% most pro-business states according to Pollina Corporate Real Estate, Inc. This study combined factors related to taxes, human resources, right-to-work legislation, energy costs, infrastructure spending, worker compensation legislation, and jobs lost or gained.

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Comments (17)
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  • connellybarnes
    , contributor
    Comments (349) | Send Message
     
    http://bit.ly/17kHbLW
    28 Aug 2013, 08:28 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4349) | Send Message
     
    Author’s reply » 1.) funny also 2.) profound to anyone who cannot tell the difference between "less" and "none".
    28 Aug 2013, 08:38 PM Reply Like
  • Perkins Cove
    , contributor
    Comments (632) | Send Message
     
    Nice title !
    29 Aug 2013, 05:00 AM Reply Like
  • jester1234
    , contributor
    Comments (12) | Send Message
     
    I wanted to thank you for this blog entry. Great stuff.
    29 Aug 2013, 05:12 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4349) | Send Message
     
    Author’s reply » You're welcome. I am glad you liked it. I have fun writing these.
    29 Aug 2013, 05:13 PM Reply Like
  • Perkins Cove
    , contributor
    Comments (632) | Send Message
     
    Any connection?.......
    http://nbcnews.to/1fve49H
    2 Sep 2013, 06:27 PM Reply Like
  • Perkins Cove
    , contributor
    Comments (632) | Send Message
     
    Face it Chris....

     

    Your inner caveman is satisfied to be a Maine-iac for now. (Forget the snide remarks from the misses about the beard and foul smell....grin)

     

    You got it good.

     

    The whole Wyoming thing is about "big sky"...no wait, that's Montana. Sorry

     

    But it's never a bad thing to dream. Tell your kids I said that.

     

    Grandpa Perk

     

    Take care of those Labs. And say hello to Deirdre on Thursday for we little folk.
    2 Sep 2013, 06:36 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4349) | Send Message
     
    Author’s reply » Will do. Thanks.
    2 Sep 2013, 06:44 PM Reply Like
  • Don Wills
    , contributor
    Comment (1) | Send Message
     
    I live in Wyoming. Although everything in the article is correct, it ignores some significant flaws - there are some real problems here. The state government is flush with money because of the coal/oil/gas royalty revenue. As a result, spending is through the roof. $18,500 is spent per K-12 student with below national average results (that amount is 3rd only to NY and NJ). Wyoming has the highest ratio of government workers to private sector workers of all states (318 to 1,000, NM is second with 267, Alaska is third with 264). The GOP controls all aspects of the power structure without any checks and balances - the result is a crony network of sweetheart deals and glad handing that rivals NYC or Chicago. Cars are taxed as real property, so the license plates that cost $35 in South Dakota will cost $500 in Wyoming. You need to know the warts before you move here.

     

    If you are looking for limited, honest government, you might want to check out New Hampshire. I think you'll find it compares very favorably with Wyoming. (And no, I'm not part of the FSP).
    2 Sep 2013, 09:22 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4349) | Send Message
     
    Author’s reply » Thanks for the comments. That is very helpful to hear. It is a strong set of caveats to my idea.
    2 Sep 2013, 09:38 PM Reply Like
  • Rakkasan
    , contributor
    Comment (1) | Send Message
     
    I lived in WY for a year and both loved it and hated it. All the extra money I made, compared to MI(where I moved from), went to the much higher fees for goods and services. I put on a single pipe/dual mufflers on my Suburban before we left for $200. While out there I asked a garage how much to do the same. I almost fell over when they said $600. A new battery with install on my Intrepid was $138 in MI. $400 in Gillette! Cost of housing was insane, but, that was due to high demand/low availability. Still a years wait for an 800 sqr.ft 1 bedroom apartment for $1500 per month! Or, even better, RV lot rent w/o septic hook-up for $100 per month! You still had to drive around to the back and dump your crapper every week or so.
    Just a few problems I encountered in WY while I was there in '06-'07.
    4 Sep 2013, 05:28 PM Reply Like
  • Chris DeMuth Jr.
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    Author’s reply » Worth knowing. Thanks! -C
    4 Sep 2013, 05:38 PM Reply Like
  • arbtrader
    , contributor
    Comments (195) | Send Message
     
    Chris, how about a tropical paradise with US law? I've been told you can negotiate what is essentially a private tax vacation with the US Virgin Islands subject to hiring a certain number of locals and/investing there. In return you get exemptions for several years on your income and cap gains tax.
    St Johns is very nice and rural, just stay away from St Thomas: gangs and cruise ship tourists!
    Live there 6.1 months a year and travel the rest of the time.
    You can google for more info- when I checked a few years back there were local law firms advising on this. Best, AT.
    5 Sep 2013, 10:07 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4349) | Send Message
     
    Author’s reply » Awesome idea. My family has been going to Caneel Bay since it first opened. I was there earlier this year (http://seekingalpha.co...).
    5 Sep 2013, 10:22 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4349) | Send Message
     
    Author’s reply » Best and worst US states for 'Taxpayer ROI': http://cnb.cx/QFiyEZ
    23 Apr, 02:45 PM Reply Like
  • connellybarnes
    , contributor
    Comments (349) | Send Message
     
    Taxachusetts represent!
    23 Apr, 10:38 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4349) | Send Message
     
    Author’s reply » Also, WY is the best place to retire: http://bit.ly/1pfLkry
    18 Jun, 10:01 AM Reply Like
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