A man deposits his tax return into a mailbox on the final day for filing taxes, April 16, 2001 in Atlanta, GA. It is estimated that some 24 million Americans will be filing their returns on this day. (Erik S. Lesser/Newsmakers)

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In recent weeks the possibility of a “Local Option Sales Tax” has been bandied about in political circles. Obviously there are always pros and cons to any type of tax that’s proposed.

Most American’s, even the wealthy, think they are tapped out when it comes to taxes so to some the disappearance of a Montana Income Tax might seem like a small, or in some cases, a large windfall.

Be Careful What You Wish For

On the surface the elimination of the income tax might seem like a pretty good idea. But the state still has obligations to you for fire, police, roads, etc. So where does the money to pay for those things come from?

Usually higher taxes somewhere else. Perhaps sales taxes on clothes, higher gas taxes, food or other commodities.

Tennessee residents hate the personal income tax so much they passed a state Constitutional Amendment to get rid of them for good.

Tax Freedom Day

Every year the Tax Foundation computes how long you have to work in each state if every dime you made went to pay all your federal, state and local taxes.

In #1 Connecticut you would have to work until May 9th of 2014 to pay all your taxes. If you live in #50 Louisiana you only have to work until March 30th to pay all your taxes.

Connecticut people have to work 39 days longer than those in Louisiana to pay all their taxes.

In Montana you would work until April 14th just two weeks longer than the folks in Louisiana.

States With No Personal Income Tax

There are seven states that have no personal income tax. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

So how long do you have to work in each of these states to pay all the other taxes compared to Montana’s April 14th date? Let’s look.

  • Alaska – April 11 - #36
  • Florida – April 15 - #25
  • Nevada – April 15 - #25
  • South Dakota – April 4 #48
  • Texas – April 13 - #32
  • Washington – April 25 - #9
  • Wyoming – April 17 #21

I’m not seeing a big advantage between Montana and the seven states listed above.

How Do Non-Income Tax States Pay The Bills?

Alaska does it with oil money. Not only do they not have a personal income tax they also don’t have a sales tax either. Oil pays the bills. But it’s very expensive to live there since almost everything has to be shipped to many remote areas.

In Florida, sales taxes pay state bills and property taxes support local communities.

Nevada is similar to Alaska with gambling money padding government coffers to the tune of over $1 billion a year from the tables.

Some Final Thoughts.

Washington drivers pay .375¢ a gallon in taxes. You’ll find higher than median cost of living in Florida, South Dakota, Washington and New Hampshire.

If we were allowed to drill, log and mine I could see Montana using much of its natural resources to pick up a good share of the tab for us.

What do you think? Tax or No Tax?

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