Once again the ugly monster of retirement is taxes and income taxes tend to chew up net income. When coupled with the worst inflation since the Carter Administration, retirees should be real careful when choosing a new destination.
Washington State continues to have no income tax or gains taxations. For retirees pulling income from investments or pensions, the lack of an income tax takes away some of the inflation pain. Income taxes are a bit hidden as they are typically taken out of income checks as payroll deductions. The net check is noticeably smaller than the gross check. Sales taxes are visible, right up in your face every time you buy something. This is why I refer to income taxes as a hidden killer.
Our state neighbor to the south has one of the most aggressive income taxes in the nation. Although Oregon's top bracket is not as brutal as states like California, New Jersey, and New York, it starts the 8.75% bracket at income as low as $9200 a year. Yikes! Income taxes tend to negatively effect savings rates. Since less money is available at the time of receiving income it can be difficult for saving. One can always cut back on expenses to save sales tax, but when your income is being eaten before you receive it, that's impossible to overcome.
During these inflationary times, Washington State again looks attractive for potential retirees. Especially when contrasted with Northwest Oregon.
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