Where Should I Live (Where I Won't Get Crushed)?

I live in New York and own property here. People in New York have begun to view their homes not as assets but as potential liabilities, since it is through people’s homes that the state and local governments channel much of their taxation. New York is already an ultra-high tax state with piles of debt, but worse than that, it is looking an enormous unfunded pension liability for all those unionized public sector employees.

When you move to New York, you are basically assuming a portion of both the existing debt and the unfunded liabilities. Call this Real Debt. Consider this a liability on your family’s balance sheet, because they will come after you for it. For New York, I calculate this number to be $22,997 per person. Minors don’t pay taxes (much), so this actually works out to more like $32,500 per person if you are over 21. $65,000 for a married couple. And, of course, much of our population doesn’t pay taxes, so the real number for taxpayers is even higher than this, likely much higher.

One also needs to keep in mind that this is just the number to cover what has already been spent/allocated for without having actually been paid for. The operating expenses of the state – and they run a crackerjack operation here in New York – come on top.

Few people I know plan to live the rest of their lives in New York. The state has made it untenable to retire here, particularly if you have any substantial assets. So, the question becomes, where do you go? In which state do you assume the smallest liability for the privilege of living there?

I wanted to get to the bottom of this, so I decided to rank every state by its "Total Real Debt" per capita.

(Methodology: To get Total Real Debt, I started with each state’s total outstanding debt. From this, I subtracted any assets (three states – New Mexico, Alaska, and Texas – actually have the equivalent of sovereign wealth funds, related to natural resources or litigation settlements) to arrive at “net debt.” To this, I added total unfunded public pensions, which then gives us the Total Real Debt number. Take this, and divide by population to get debt per capita.)

Here are all 50 states plus the District of Columbia:

Sources: U.S. Census, American Enterprise Institute

Some thoughts:

Move to Alaska, Tennessee, Wyoming, Florida, or Indiana. All seem to have run their states in fiscally responsible fashions and all have zero or low tax rates.

Alaska actually pays you to live there, roughly $2000 a year. This comes out of a fund created from revenue related to the Alaska pipeline. Of course, this gets offset by the generally higher cost of living, and the fact that you will freeze your ass off most of the year.

The bottom ten (or even fifteen) are probably all as bad as they appear – total basket cases – with the possible exception of Nevada, which has plenty of gambling revenue (and thus the 0% tax rate).

All this is on top of the $42,000 per head that our national debt comes to. Somebody save us!