No one likes paying income tax, but many people pay tax twice: once to the federal government and once to their state. Yet seven states have no state income tax, and two more are thinking about joining that group by eliminating their state income tax provisions.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the provisions that Georgia and South Carolina are discussing to get rid of their state income taxes. Dan notes that competitive pressure plays a factor in income-tax structures, with Georgia bordering both tax-free Florida and Tennessee, which has no income tax except on investment income, and South Carolina located close to both of those states. But Dan goes on to discuss the concerns that some have with the proposals, including the need to raise tax revenue from other sources or find spending cuts. Dan concludes that with so many distributional issues, it could be a while before either state actually pulls the trigger and eliminates state income taxes for good.
Is Uncle Sam about to claim 40% of your hard-earned assets?
Thanks to a 2013 law called the American Taxpayer Relief Act, or ATRA, he can, and will, if you aren't properly prepared.
Fortunately, The Motley Fool recently uncovered an arsenal of little-known loopholes to protect yourself from ATRA and help keep the taxman at bay when he inevitably comes calling. We reveal them all in a brand-new special report. Simply click the following link below for instant, 100% free access.
Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.