Personal Finance (Not Investing) • No-state-income-tax states are not good for retirees.

Let's suppose that Scrooge McDuck has $100M in a taxable account, all of which is in the Vanguard S&P 500 index fund. Mr. McDuck is looking at an annual dividend distribution of$1.4M, give or take. If Mr. McDuck lives in in California, has no other income, files as single, and withdraws 0% from his portfolio annually, then the state of California will levy around 13% marginal income tax rate. The total tax rate might be around 11%, for an annual bill of $143,000.

Now let's ask ourselves this: which of the zero-state-income-tax states in America is going to charge $143K/year in property tax, sales tax or whatever other tax or fees, if Mr. McDuck, who is notoriously parsimonious, were to relocate there? Suppose that McDuck buys a dumpy little nest somewhere in Florida. Insurance is high, but is it going to be six figures?

Scrooge McDuck bought two $10 million mansions 20 years ago that are now worth $40 million a piece, one in Florida, the other in California. He pays the state of Florida between $300,000 and $400,000 annually in property taxes, while California is limited by Prop 13 to charging him less than $150,000.

Or Mr. McDuck could buy a 10 million dollar house in Charleston SC. As a full time resident he would pay $50,970 in property tax. If he was a non resident or if this was his second home in the state his property tax would be $143,090.

https://www.locountry.com/real+estate+t ... on+sc.html

If he had motor vehicles or boats with motors that had SC registrations he would pay property tax on them every year as well. We paid $800 property tax on a fairly new car the first year when we moved to SC, and a $250 transfer fee each on both cars we brought with us.

I don't live in Charleston county, but do live in SC, as does a close member of my family, who lives in a different county than we do, but not Charleston county. We both have senior discounts on our property taxes. His house is appraised about 150k less than mine. His property taxes are $1,200 higher than mine.

Although SC has state taxes we've paid little or no state tax in the 5 years since we moved here because SC doesn't tax SS and gives a 30k exemption on other retirement income for a couple. The state tax exemption in Georgia for retirement income for a couple is 130k, and they don't tax SS either so it doesn't count as retirement income.

Statistics: Posted by vested1 — Thu Jan 18, 2024 7:08 am — Replies 72 — Views 5351

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