Tax Calculator Says Jay Leno Saves Lots in Taxes If He Moves to S.D.
(NPN) – Jay Leno could save a lot of money if he moved to South Dakota from New York.
That’s according to the National Center for Policy Analysis and their online State Tax Calculator.
If the famous talk show host moved from New York to South Dakota, he would gain an extra $93,776 a year, according to the calculator. Similarly, if he saved this extra income, it would accumulate to $4,284,899 that he could leave to his children.
The policy group says that moving from a high-tax state to a low-tax state could save taxpayers thousands, even millions, of dollars over your lifetime. Moving in the opposite direction, they say, by contrast, could prove to be expensive.
The website is a first-of-its-kind tool to help people determine just what’s at stake with their taxes. The calculator computes the difference in the amount of federal and state income taxes, property taxes and sales taxes an individual could expect to pay over their life when moving from one state to another.
According to NCPA, the calculator is based on the most sophisticated planning model. The model automatically makes saving and investment decisions for the household (including IRA deposits and withdrawals) in order to maximize personal consumption and smooth it out over a lifetime.
“The tax burden in a new state can make a huge difference in your retirement plans,” said NCPA senior fellow Pamela Villarreal.
Villarreal offered other examples:
• If a 40-year-old man earning $100,000 a year moves from California to Alaska he will have an extra $4,213 a year to spend every year for the rest his life; the extra income would total$351,700 if saved and left to his children – an amount equal to more than three times his annual income.
• If a 40-year-old woman earning $500,000 a year moves from New Jersey to Wyoming, she will have an additional $12,200 a year in spendable income every year for the rest of her life; if the extra income is saved, it would accumulate to more than $1 million over her lifetime.
“The tax impact is much greater at higher incomes,” said Villarreal. “High income taxpayers have a lot to gain by fleeing high-tax states. When they leave, the average taxpayer gets stuck with the higher tax burden.”
“We’re already seeing some high-profile examples of tax-saving relocations,” said Villarreal. “Golfer Phil Mickelson’s comments about moving out of California are one example. Another is LeBron James’s choice to play for the Miami Heat rather than NBA teams in higher tax states, like New York, Illinois and California.”
While using it to calculate celebrities’ savings is fun, the State Tax Calculator is designed for the average consumer and their financial life.
The NCPA is a nonprofit, nonpartisan public policy research organization, established in 1983.