RWP was born in Manchester, in the north of England, in the late 1950s, so he is very old. He really liked the north of England, which by 1965 was hip and had three TV channels, and where he went to a coed school. His parents, for reasons best known to themselves, then yanked him away, to Belfast and then Dublin, which had one TV channel that started up at 6 pm with the Angelus (Catholic call to prayer). He also had to go to an all boys school, where he realized he really missed girls. This probably let him focus on schoolwork, though, and at age 19, after he had finished college, he set off for America, where he still resides. He has a bachelors degree in biochemistry and a Ph.D. from Harvard in biophysics, and has lived also in Mainz, Germany, Setauket NY, and Richland WA. He currently divides his time between Nebraska, Rosslyn VA, and Florida.

Friday, December 28, 2012

No country for old men

I'll be honest: I've never seriously considered retiring in Nebraska. Who wants, in his sixties, to deal with weather like Lincoln has experienced in the last two weeks? But doing the usual end of year financial review, I decided to find out exactly how bad Nebraska is for retirees, from a tax standpoint. And the answer is, it's awful. It makes a couple of 'worst ten states for retirees' lists. It has a income tax which is towards the middle in rates but which kicks in at a very low income level. It taxes social security benefits at the highest rate of all the states. It taxes pensions. It has a state estate tax (many states don't). State sales taxes look moderate, but when you consider the local sales taxes that Lincoln and Omaha charges, and then the many and varied occupation taxes, and the substantial property tax...well, why put up with that? In Florida, you pay no income tax, no tax on social security benefit, get a better homestead exemption than Nebraska gives, pay no tax on retirement income, and pay no estate tax. No contest.

A more interesting question, perhaps, is whether it is good public policy to drive out retirees, particularly wealthier retirees. Granted, the elderly don't produce much and consume a lot in services. On the other hand, they are (usually) living off investment income and transfer payments, which are spent in their home state. Their heavy consumption of health care is mostly paid for by Medicare and employs doctors and a host of other health care providers. They don't send kids to the public schools. I haven't done a detailed analysis, but my guess is that they're a net plus for the economy.

Little in Nebraska's tax policy makes much sense, but this seems particularly short sighted.

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