Jeff Rose has an interesting article on Forbes.com calculating the take-home value of a $200,000 income in all 50 states. Such a review requires assumptions and broad strokes, but the attempt is interesting.
Naturally, Rhode Island is in the bottom 8, with the theoretical person taking home $140,500 after taxes, or a 30% effective tax rate. That ties the Ocean State with New Jersey and is worse only than Connecticut, Minnesota, Maine, Vermont, Hawaii, and (at the bottom of the list) New York. At the other end of the ranking is Delaware, with $149,500, or an effective 25% rate.
Therein lies the key point. Sure, folks will have a hard time feeling bad for those with such high incomes, but when they can give themselves up to a 6% raise simply by relocating, we should expect that many of them will try to do so.
That likelihood raises a related topic. These rankings are purely tax burdens. Different states have different costs of living, too. If you’re living in Providence, your cost of living is 22% higher than the national average, according to Payscale.com. Dover, Delaware, by contrast, is 3% lower than the national average. That’s a 25% swing.
Readers can play around with the tools to look at the states that Rhode Islanders often mention when they daydream about leaving. Raleigh, North Carolina, is 6% below the national average for cost of living. Nashville, Tennessee, is 4% below. Here’s the table that Payscale.com generates for comparisons:
Rhode Island doesn’t need new gimmicks or more corporate cronyism to turn itself around. We need to recognize and respond to this core problem of making it too expensive to live here, with too little opportunity to show for it. More and more, it seems that we pay a tax premium merely to enable government employees and other insiders to make up for our high cost of living.