> e.g. suppose you are living in NYC and earning well. Then you pay %35 federal (or is it %39 yet), + 8% state + 5% city on income, for a total of %48 income ta

> e.g. suppose you are living in NYC and earning well. Then you pay %35 federal (or is it %39 yet), + 8% state + 5% city on income, for a total of %48 income taxes. If you lived in Austin Texas you'd avoid that 8% state tax and 5% city tax. Most major (and minor) US cities do not have an income tax. And a few states don't even have an Income tax (Texas, Alaska, Florida, Nevada, South Dakota, Washington and Wyoming). You could probably include Tennesse And New Hampshire in there too as they only require tax on dividends. The reason why NYC and NY State can get away with charging those tax rates is that there's a sizable contingent of people who can't imagine living (or working) anywhere else other than NYC (it's a hell of a city). When you have a captive tax base like that it's in the state's rational best interest to jack the rates up as high as possible. My advice: Vote with your feet.