Don't understand Idaho's high taxes

[Cnynrat]

Originally Posted by eqttrdr

It is for our family being self employed...


HUGE difference paying an extra 7.4% state taxes on our income...




love it here but thats a TON of money for our middle class family =-(

I'm curious, extra compared to what? A state without an income tax? If so, yes, that would be true, but there are few of those states.

Once we move to Idaho we expect our effective state income tax rate will be about the same as here in CA. That's a result of the steeply progressive curve in Idaho where you are in the top tax bracket at a relatively low income. CA gets a lot of flack for high taxes, but a lot of that is focused on the top tax bracket of 13.3%, but folks gloss over the fact that you need over $1M in annual income to be in that bracket. Even here few reach that level.

I have a colleague now working in CA who relocated from Iowa, which most would describe as a lower tax state than CA. He had a similar revelation, that his state income tax burden here in CA is about the same as it was in Iowa.

The lesson I take from this is that the states will get the funds needed to run themselves one way or the other. Some take more from an income tax, others from property tax, others from sales tax, and so on. Different tax structures may be more or less favorable to each of us based on our personal situation. I figure I'm going to get hit with the taxes one way or the other, so to me it's more important to focus on what the state is spending their money on, and how effectively they manage the budget and the state government overall. Most states probably have some room for improvement based on that measure, but I think ID does better than most in that regard.

Dave

[VandalsLOL]

Originally Posted by Cnynrat

The lesson I take from this is that the states will get the funds needed to run themselves one way or the other. Some take more from an income tax, others from property tax, others from sales tax, and so on. Different tax structures may be more or less favorable to each of us based on our personal situation.

Exactly!

States need money to do their business and provide their services; some do it better than others, all states do it differently, some states fit one's unique situation better than others, but in reality there shouldn't be THAT much different in the overall taxation. If there is, you could probably bet the state has lower revenues, and then you'll want to look at what that means too. For instance...

Originally Posted by Cnynrat

I figure I'm going to get hit with the taxes one way or the other, so to me it's more important to focus on what the state is spending their money on, and how effectively they manage the budget and the state government overall. Most states probably have some room for improvement based on that measure, but I think ID does better than most in that regard.

Idaho is great in that it spends less than other states, is generally more efficient, and has a balance budget. HOWEVER, the net result of that is that Idaho spends very little on many important structural and infrastructual items, and the consequences are apparent.

Idaho spends very little on education, and as a result has some of the lowest education rankings in the nation. While you can find good schools here, our students perform far lower in many important metrics, primary among them going to and finishing college. When our students do go to college, especially those from rural areas, they consistently underperform and dominate remedial course rosters.

Idaho also spends very little on traffic infrastructure, so our roads, bridges, and the like are woefully out of date and in need of repair. This has been a focus the past two legislative sessions, and it remains to be seen whether they put their money where their mouth is.

There are some other things we spend little to no money on, but those things may or may not affect you. It is important to really do research to see how one's personal situation and needs apply.

[ShadoAngel]

Originally Posted by eqttrdr

It is for our family being self employed...

HUGE difference paying an extra 7.4% state taxes on our income...

love it here but thats a TON of money for our middle class family =-(

What about all the other taxes?

For instance, I live in Texas where we don't have a state income tax. However we have a fairly high sales tax and the 3rd highest property tax rate in the country - almost 3 times the rate in Idaho.

So a $200,000 house in Idaho costs you $1380 a year in taxes (0.69%) whereas the same house in Texas would cost $3620 (1.81%). That's a difference of $2240.

Using a state income tax calculator for a single person making 60k a year, your state income taxes would be $3450. If you're married or have children, I believe you can take more exemptions and lower your taxable income, lowering your state income taxes (similar to your federal income taxes.)

At that point, there's less than a $1000/year difference between those two rates and that doesn't factor in the cost of living, differences in utility rates, differences in sales taxes or others. IMO, it's a wash. There are lot of factors that go into it, I was just using those two as examples. You could repeat with other comparisons to other states across the country.

States are going to tax you, they just differ as to how. Idaho's taxes aren't really higher than anywhere else, they're just different. If it's not this one, it's that one.

[Cnynrat]

Originally Posted by VandalsLOL

Idaho spends very little on education, and as a result has some of the lowest education rankings in the nation. While you can find good schools here, our students perform far lower in many important metrics, primary among them going to and finishing college. When our students do go to college, especially those from rural areas, they consistently underperform and dominate remedial course rosters.

This does seem to be the case, but I am always reluctant to identify more spending as the solution to every problem in our educational system. Overall, we've increased K-12 spending a lot in the past years with no apparent benefit in student outcomes, so it seems money is not being spent to good effect. We should back a lot of that waste out of the system first, then if we can identify areas where more spending will produce positive results, I'm all in.

Originally Posted by VandalsLOL

Idaho also spends very little on traffic infrastructure, so our roads, bridges, and the like are woefully out of date and in need of repair. This has been a focus the past two legislative sessions, and it remains to be seen whether they put their money where their mouth is.

I've read about the recent actions in the legislature, and the general concern about road infrastructure, but I have to say in my travels around north Idaho I haven't seen much evidence of roads and bridges being out of date and in need of repair. In fact, in the past few years that we've been traveling there regularly there has been a big project to widen Rt 95. Quite honestly the roads up there are in much better shape than they are here in my area of CA, but that may not be the best yardstick to use as a comparison.

In general we're still very much in the learning mode about these sorts of issues in our future home state. It will be interesting to see how my perception changes over the next few years once we are there.

Dave

[volosong]

Originally Posted by Cnynrat

I've read about the recent actions in the legislature, and the general concern about road infrastructure, but I have to say in my travels around north Idaho I haven't seen much evidence of roads and bridges being out of date and in need of repair. In fact, in the past few years that we've been traveling there regularly there has been a big project to widen Rt 95. Quite honestly the roads up there are in much better shape than they are here in my area of CA, but that may not be the best yardstick to use as a comparison.

Having just returned from NID and extensive travels by both car and bike, I must say that I found the condition of the road infrastructure in Idaho to be fantastic! I looked, and looked, but found nary a pothole in the whole state, (at least the part I traveled - extreme western edge from south to north, and back).

[OneDawg]

Originally Posted by ShadoAngel

What about all the other taxes? For instance, I live in Texas where we don't have a state income taxex. So a $200,000 house in Idaho costs you $1380 a year in taxes (0.69%) whereas the same house in Texas would cost $3620 (1.81%). That's a difference of $2240.

Does that include the school taxes each county assesses?
When we had a home in Wyoming our tax based on your $200k was $1615. It's also a state with no personal or corp income taxes, 4-5% sales tax, but high ad-valorem on vehicles.

States are going to tax you, they just differ as to how. Idaho's taxes aren't really higher than anywhere else, they're just different. If it's not this one, it's that one.

What is the cost difference on license plates? Vehicle inspection fees? Sales taxes?

[ShadoAngel]

Originally Posted by OneDawg

Does that include the school taxes each county assesses?
When we had a home in Wyoming our tax based on your $200k was $1615. It's also a state with no personal or corp income taxes, 4-5% sales tax, but high ad-valorem on vehicles.

From the website I linked to where the rates were from:

Because the calculations used to determine property taxes vary widely from county to county, the best way to compare property taxes on a large scale is by using aggregate data. On Tax-Rates.org, our data allows you to compare property taxes across states and counties by median property tax in dollars, median property tax as percentage of home value, and several other benchmarks.

Anyone looking to relocate should obviously do more specific research into the county and city (if any) they want to move to, in order to get more exact figures.

What is the cost difference on license plates? Vehicle inspection fees? Sales taxes?

No idea. You also have to factor in the costs of goods and services. A state with a lower sales tax but a higher cost of goods can wind up being more expensive than a state with a higher sales tax but a lower cost of goods. Ditto with property tax rates - the same house is more expensive in State 1, with a lower rate can be more expensive overall than in State 2, with a lower cost but higher tax rate.

The purpose of my post wasn't a complete analysis of the myriad of state, county, and city taxes (among other special tax districts) between locations, but an example showing that a single tax factor, such an income tax, shouldn't be the sole determination when assessing a location's taxes. Saying "State 1 has no sales tax, so it's cheaper than State 2, which does have a sales tax" is an incorrect way of viewing things. You've got to look at a ton of factors to be able to see if Idaho (and your specific county/city in Idaho) are going to be cheaper or more expensive to live in than where you're at now - or some other location.

Finally, due to personal circumstances, it's easily possible for it to be cheaper for one person and more expensive for another, due to your sources of income, necessary spending, etc.

[mpsouth]

The following map (from Kiplinger) categorizes the states' friendliness towards retirees by taking into consideration income taxes, property taxes, and sales taxes. ID isn't in the Top 10 but it's better than most.
Dark Green = Most Tax Friendly
Light Green = Tax Friendly
Pink = Not Tax Friendly
Maroon = Least Tax Friendly
Gray = Mixed Bag



MOD NOTE: Since this map was published, it has been updated. They hyper link goes to the new map with the new color scheme. It is:

dark green = most tax friendly
light green = tax friendlly
white = mixed
light purple = tax unfriendly
dark purple = most tax unfriendly