Your Retirement Life: Looking for Tax Freedom? Here's Where to Find It

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With tax season here, it’s helpful to examine your own tax situation and understand the alternatives. Read this post I wrote on July 5, 2018 for guidance.

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As Americans near retirement, they are always looking for ways to maximize their savings. At the top of the list of options is avoiding punitive taxation at all levels. There isn’t much most people can do about federal taxes (other than vote), but Americans are gifted with a choice of 50 states and a handful of territories from which to choose where to live. I have been encouraging Americans to explore their options when it comes to retirement.

Many states have made Right to Work the law of the land, preventing unions from forcing employees into donating to the union’s pet political causes. Without unlimited union money funding drives for bigger government, citizens of Right to Work states achieve “tax freedom” two weeks earlier than those who live in forced unionism states.

“Tax freedom day” is a phrase used to describe the day of the year at which you have earned enough wages to pay your taxes for the entire year. The higher your taxes, the longer it takes from January 1 to reach your own Tax Freedom day. But, if you live in a Right to Work state, chances are your Tax Freedom day is sooner.

The National Right to Work Committee explains:

On April 19, according to the nonpartisan, Washington, D.C.- based Tax Foundation, “Tax Freedom Day” (TFD) 2018 finally arrived.

The Tax Foundation’s entire analysis is available at www.taxfoundation.org — the group’s website.

As the Tax Foundation explains, TFD is “the day when the nation as a whole has earned enough money to pay its total tax bill for the year.”

TFD “takes all federal, state and local taxes and divides them by the nation’s income.”

According to the Tax Foundation’s current estimate, this year Americans will pay “$3.39 trillion in federal taxes and $1.80 trillion in state and local taxes, for a total tax bill of $5.19 trillion . . ..” That amounts to nearly 30% of all of the nation’s income.

Right to Work State Residents To Receive Nearly Two Extra Weeks of Take-Home Pay

Not surprisingly, this burden is not borne equally by all Americans, and several factors play a significant role in determining when TFD comes for individual taxpayers and households.

The Tax Foundation highlighted two: “The total tax burden borne by residents of different states varies considerably due to differing state tax policies and the progressivity of the federal tax system.”

Hours after the Tax Foundation issued its report on TFD 2018, the National Institute for Labor Relations Research calculated average TFD’s for the 28 Right to Work states (excluding Missouri, whose 15-month-old law banning forced union dues and fees has not yet not taken effect due to Big Labor obstruction) and the 22 forced-unionism states.

To derive average TFD’s for states where compulsory union dues are either permitted or prohibited, the Institute took aggregate state personal income data for 2017 as reported by the U.S. Commerce Department and the estimated 2018 TFD’s for the 50 states as reported by the Tax Foundation.

The Institute estimates that this year residents of forced-unionism states are forking over 31.6% of their total personal income in taxes, a 13% higher share than the Right to Work state average.

TFD in compulsory-unionism states as a group didn’t come until April 26 this year.

In contrast, TFD in Right to Work states as a group came on April 13, or nearly two weeks earlier than the forced-unionism average.

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.