How Much Is $100 Worth in Your State? Tax Expert Rob Wood Has the Answer
The answer sounds obvious: $100 is $100 in the USA. The value of money doesn’t change from state to state, does it? Well, the value of money in your pocket is the same wherever you go in the country, but the question is, how much of what you earn do you get to keep? How does that number change from state to state? Tax lawyer Rob Wood explains that state taxes vary considerably from place to place, so how much of your earnings you get to keep is important. He wrote about the subject in a recent Forbes article, “How Much Is $100 Worth In Your State?”
Wood says that the answer to “how much is $100 worth in your state” may surprise you. The tax rates vary widely from state to state, and those taxes directly affect how much of your income you actually have to spend. Wood’s article includes a map that compares the value of $100 on a state-by-state basis. The map was created by the Tax Foundation using federal data from the U.S. Bureau of Economic Analysis.
Wood explains that the information reflected on the map is based on 2016 prices. The analysis looks at both prices and taxes to determine the value of a dollar from place to place. This is important because prices also vary widely from place to place. Wood points out that people can’t change the price of goods where they live. If they want to get more for their money, they may have to move. This is especially true of people in California (Wood’s state), where the state tax rate is very high.
People who want to move to save money on taxes may make that choice based on their present income or based on “an anticipated big income event.” For instance, if you are a plaintiff in a big lawsuit and you are nearing a settlement that might bring you a lot of money in one check, you might think about moving to a state that would give you more for your money.
Wood points out that there are a few states that have no income tax. There are also states that have no general income tax but have certain special taxes. Also, there are people who spend part of the year in two states (for example, they winter in Arizona). If you are a California resident, you might want to consider shifting your domicile to Arizona for tax reasons. People who would like to explore making a move in their domicile to reduce their taxes should consult a tax expert.
Robert W. Wood is the Managing Partner of Wood LLP, San Francisco. Often listed among the best tax lawyers in America, Wood has broad experience in corporate, partnership and individual tax matters. Concerning the tax treatment of litigation settlements and judgments, he is perhaps the preeminent tax lawyer in the United States. He is also an authority on merger and acquisition tax matters, tax opinions, offshore account and entity disclosures, and many types of tax controversies. The Legal Broadcast Network is a featured network of Sequence Media Group.