A recent study by the Mercatus Center at George Mason University found that, unsurprisingly, states with higher taxes have lower economic growth, even when controlling for a variety of factors including a state’s population growth, educational attainment, and value of natural resources. One of the study’s findings? A one-percent increase in the average tax rate is associated with a 1.9 percent decrease in Gross State Product.
On a similar note, after leaving Cleveland in 2010 to play for Florida’s Miami Heat, pro basketball player Lebron James is returning to his roots. He has various reasons for doing so, but evidently lower taxes is not one of them. According to NCPA’s State Tax Calculator (www.whynotmove.org), it will cost him roughly an additional half a million dollars a year in state and local taxes, based on his $21 million salary, estimated net worth and the estimated value of his home in Akron. Since Lebron is only 29, assuming he lives to be 100, this amounts to tens of millions of dollars in the loss of lifetime wealth.
- Florida has no state income tax, while Ohio has a top marginal rate of 5.92 percent.
- According to the Tax Foundation, Florida’s median property tax rate is 0.97 percent, while Ohio’s rate is 1.36 percent.
- The Tax Foundation also reports that Florida’s state and local average sales tax rate is 6.62 percent; Ohio’s rate is 6.8 percent.
Of course, this is a rather simplified version of what his exact additional tax liability will be, but for those who don’t think state taxes make much of a difference, it’s time to reconsider.