Dearth and Taxes

Is there a place where you can retire and not have to pay any taxes? The answer is a qualified “Yes.”

This delightful tax-free haven is a tiny country bordered on each side by the republic of Nobody Gets Out Alive and the principality of No Good Deed Goes Unpunished. It has no paved roads, no running water, no fire department and its army is one guy armed with a welcome mat.

Last week we revealed the lengths a federal friend went to in an effort to avoid taxes. He moved from Virginia to the Washington-Oregon border to avoid state and sales taxes. The column on tax-friendly states prompted a big batch of e-mails. Many of them were from folks who have done extensive research on local taxes, or who have otherwise discovered that it’s hard, and not always wise, to try to escape taxes.

Here are some of their comments:

While he, your friend, is not paying sales tax in Oregon, as a Washington resident he is liable for use tax (which equates to sales tax he would have paid had he purchased the items in Washington) for anything he brings back to Washington and uses there. Oregon doesn’t have a sales tax because they have an income tax. Washington has a sales tax because they don’t have an income tax. Washington State Department of Revenue has been known to stake out high ticket item emporiums on the border and follow people back to Washington with refrigerators, furniture, cars, etc. To quote Supreme Court Justice Homes, taxes are the price we pay to live in a civilized society. Roads, bridges, firefighters, police, a military including a coast guard who do civilian rescues as well as provide for our defense, etc. If you think taxes are not being used effectively, organize to change things, but don’t cheat yourself and your fellow citizens by not paying your fair share. Just sign me One Who Gladly Pays for Civilization

Where to Retire magazine is a wonderful resource for researching retirement possibilities. Articles routinely include: Winter and Summer temps… Availability of medical facilities… Average cost of living… Tax structure for retirees… Nearest major airport or city… Population and much more… Plus they do theme articles on locations across the country with similar attractions. Mike R.

One other thing to consider, in addition to whether a particular state taxes pension income, is what other taxes it does have. You touched on it in the comments regarding living on the Washington/Oregon border (no state income tax in Washington – no sales tax in Oregon). States have to get their revenues from somewhere and if they don’t tax your income, they are certainly going to tax something else. There are probably states that don’t tax pension income but more than make it up in sales tax, personal property tax and other kinds of taxes. Frank Buell

In “shopping” for a retirement spot in a low tax juristiction, it is good to remember that you get what you pay for – if you’re lucky. Low tax areas often also have limited services for seniors as well as others. As we age, we often become more dependent on mass transit, senior centers, low cost entertainment etc. We are also more likely to want public buildings and mass transit to be “accessible” to those with mobility impairments. Of course retirees with fat pension checks can buy whatever conveniences they desire. But the rest of us should be careful not to give up valuable benefits and quality of life advantages for a tax advantage netting us a lot less. Renee Toback

Nearly Useless Factoid

Happy 250th Birthday, James Monroe! It wasn’t always “The Era of Good Feeling” however. Earlier in the fifth president’s career, according to usatrivia.com, when Monroe lost his bid for re-election to the Virginia legislature because he refused to serve complimentary rum to potential voters at polling places. Live and learn.

To reach me: mcausey@federalnewsradio.com

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