If you are contemplating a relocation, especially one in which you have some flexibility in terms of geography, you might want to keep your eye on state legislatures' activities in the next few months. The states in the warmer weather areas that lost the most in tax revenue in the last quarter of 2008 (between 10% and 25%) include Virginia and Florida, with Tennessee, South Carolina and Alabama at 5% to 10% losses. Milder shortfalls (less than 5%) were felt in North Carolina, Georgia, Mississippi and Texas. Louisiana actually had a revenue increase.
I have preached in this space that taxes are only one component of the cost of living and depend largely on an individual's circumstances and lifestyle. Life in a zero-income-tax state like Tennessee, Florida or Texas, for example, could wind up being just as expensive as in the Carolinas, the difference made up by higher sales, property and use taxes. Still, the income shortfalls in the states bear watching before making a commitment to move.
For the Wall Street Journal's map indicating tax status state by state, click here .