The headline said: "Taxes Seen As Key Factor in Choosing a Retirement Destination."
Hmmm, I thought, reaching for my open mind pills, this should be interesting...
That's because last year, we wrote that Minnesota state taxes don't appear to be a significant factor in the wealthy choosing a retirement state. Nor could we find credible evidence Minnesota taxes were driving away business. I am currently doing some work to further illuminate how tax policy may be affecting high net worth retirees' decisions to remain in Minnesota.
Was there a new study showing that taxes were indeed a "key factor" in contradiction of our findings? If so, I wanted to know about it, and in the spirit of honest inquiry, was prepared to tell you about it.
Turns out the headline writer got a bit ahead of the content, which was a press release placed on a PR news site promoting an online "retirement living information center."
The web site features a long article with a state-by-state summary of how various state taxes affect seniors, but you're still on your own if you want to do the more complex comparison the article suggests.
Many people planning to retire use the presence or absence of a state income tax as a litmus test for a retirement destination. This is a serious miscalculation since higher sales and property taxes can more than offset the lack of a state income tax. The lack of a state income tax doesn’t necessarily ensure a low total tax burden.
While it's possibly true — that "many people" apply a misleading test to help winnow potential retirement destinations — for our uses, the statement is also impossibly imprecise. It doesn't tell us taxes motivate people to move; it starts with the assumption these retirees have already decided to move.
This is as close as it comes to a definitive statement about taxes influencing state of residence choices:
If all other things are equal, a state with a lower tax burden is a more attractive place to retire than a state with a higher one.
But we know all other things are not equal, from weather and views, to senior-friendly services and culture, to proximity of friends and family. Those are the "key factors" for most retirees.
— Charlie Quimby