Choose wisely my friend. Just because a state’s tax rate and cost of living is low doesn’t mean it’s great place to live or move to

One of the numerous benefits of living in the US is that it’s a big country, and if you don’t like where you are currently living, or the location doesn’t provide you with the things you need, want, or desire, then all things being equal, you have the freedom to move.

This is especially true with respect to economic challenges and opportunities you encounter. If you lose your job and can’t find appropriate work in your city, county or state, or your dream job or business lies elsewhere, unless you want or need to be close to family members or friends, in general you have the liberty to pack up and go somewhere else.

Relocating (which is easier for some people than others) has been highlighted during the COVID-19 pandemic. During this time some individuals (particularly knowledge workers) have jobs that are portable, and many of them can move to a different state or country and continue their work with a minimum of headaches.

Unless the local sheriff drove you to the outskirts of your town, and told you to never come back, people have the power to make a rational approach about where they want to relocate. Although “bounded rationality” is real, potential movers can rank order their priorities, develop a list of possible locations, maybe even develop a matrix, collect relevant information about these places, possibly take a vacation there, and even temporally live in the new community before making the final decision.

Here’s the rub. In the desire to move somewhere else many people are attracted to parts of the country that have low costs of living, including property costs and tax rates.

In this scenario some people consider moving from a blue (i.e., Democratic and liberal leaning) state, to a red (i.e., Republican and conservative) or even purple (i.e., half Democratic and half Republican) state.

Some, but not all, traditional red states (e.g., Kansas, Oklahoma, Tennessee, and Wyoming) have very attractive lower costs of living, including lower real estate prices. Also state and sales taxes are less, if not close to nonexistent, in many red states (i.e., Alabama, Alaska, Montana, South Carolina, Utah and Wyoming).

Keep in mind, however, that just because a red state doesn’t have a personal income tax, doesn’t necessarily mean that other types of taxes (e.g., sales) are also absent, nor have the other benefits previously mentioned. But these criteria should not be the only ones that force your hand.

What many red states do have, on the other hand, is a different culture. In general, the majority of people living in these states, have red state attitudes towards politics, race, gender, sexual preference, equality, religion, etc.

If you live in a big metropolis, a university town, or are sedentary (i.e., don’t go out of your house much), home school your children, and really don’t interact with your neighbors or the locals, then this kind of situation may be ideal for you.

On the other hand, if you live in the suburbs of the bigger cities, or in the smaller towns of red states, and do interact with people in your community, you may be tad shocked or disappointed when you talk about things more consequential than the weather. You may end up biting your tongue more often than you care to avoid interpersonal conflicts.

Over time, these kinds of interactions can have very nonpecuniary costs to you, your mental and emotional health, and the people you live with.

In short, you don’t want to be back where you started, looking to move once again.