“I been doin’ fine on Houston time… When the sun sets on Copano Bay.” — “I Like Texas” by Pat Green
I recently heard a well-educated Texan talk about his home state seceding from the Union. Floridians never talk about seceding. I’m not sure we ever joined. Andrew Jackson probably took one look at Florida’s impenetrable swamps, our alligators and mosquitoes, and at the defiant Seminoles ensconced in the muck, and said, “Let’s push on to greener pastures.”
Floridaand Texas share a remarkable size and breathtaking beauty. Driving the length of Florida, from Pensacola to Key West, or the width of Texas, from El Paso to Tyler, is a significant excursion. The exquisite blue-white swirls in the late summer sky over Odessa and the west Texas plains are virtually indescribable, just as the painted colors of a winter sunset over the Gulf in Destin defy verbal definition. Texas is Sam Houston, Jim Bowie, the Alamo and the hill country. Florida is Disney World, The Everglades, A1A and white sand beaches.
Texas, which currently enjoys a bustling economy, is electronics, airlines, cattle, cotton, lumber and big oil. Many Floridians are more interested in preventing oil from washing up on our shores than in drilling for it. Our economy is fueled by international trade, tourism, the space industry, agriculture and the military.
The states also share a couple of similarities. One, no state income tax. Two, growing populations. Texas generates almost 9 percent of the U.S. GDP; Florida produces just under 6 percent. But Florida may pass New York in population this year (according to the Associated Press), and with 20 million residents, will then trail only California and yes, Texas, in population.
Seven states operate without a state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Is it a coincidence that the economies in several of these states are booming? Maybe. The relationship between state taxes and overall economic health is a complex issue. Some Texans, for instance, complain that while Texas has no state income tax, residents are saddled with high property taxes instead.
The Tax Foundation compiles a list of the states which pay the lowest total per capita income in state taxes. Alaska, at 6.4 percent of income, is the lowest. Florida is fourth at only 7.4 percent of income.
As Elizabeth Malm, an economist at The Tax Foundation writes, a “state’s ability to ‘export its tax burden’, or collect revenues from non-residents,” is a key component in meeting state revenue requirements. Few states perform this function better than Florida. It also appears that states with low taxation are attracting new growth and new residents, as they must, to compete with other states in the new state taxation and growth paradigm.
Margaret R. McDowell, ChFC, AIF, is the founder and principal of Arbor Wealth Management, LLC, a fee-only, fiduciary registered investment advisory firm located near Sandestin (www.arborwealth.net~850-608-6121).