2014-07-15

Home, Part II

It's no secret that one of the main things driving us to a US move was the lower overall tax rate. In Canada, we were losing a lot of money to the government. Without commenting on the relative merits of an expansive array of social services, it is a very expensive way for a middle class family to live. The incentive is strong for a lower-income family to stay in an area that pairs higher taxes with expansive social services, because such a family contributes little money to the operation of these services while drawing heavily upon them. That is, after all, the whole point of social welfare programs.

For a middle-income family like mine, though, the incentive is weaker to the point of being a disincentive. We don't have the kind of capital-driven income that earns a lower tax rate than so-called "ordinary income" under the tax code, so we are the meat-and-potatoes of the tax revenue base. Meanwhile, our relative wealth disqualifies us as recipients of welfare - not that we're looking to get it, anyway. Taking the politics out of the decision, and looking at it logically, yields a simple and obvious conclusion. We draw $0 in social welfare and pay $X; we will always be financially better-off in a situation in which we draw $0 in social welfare and pay $Y, whenever Y < X.

Hence, we utlimately decided to seek Y over X. US federal taxes are lower than Canadian taxes (for us, anyway), and Texas famously has no state income tax. Even sales taxes are much lower here, coming in at about half of what we were paying in Ontario. Even property taxes - which are notoriously high in Texas, compared to other US states - are about the same as what we would have had to pay in Ottawa. Add it all up, and it represents a huge financial win for our family.

It's true that money can't buy you happineess, but you'd be hard-pressed to find anyone in the known universe who would suggest that a person will be significantly happier with significantly less money. So long as no other key elements of one's lifestyle changes as a result of an increase in wealth or income, more money does indeed translate into more happiness in the form of better luxuries, a more comfortable emergency fund, higher quality vacations, a few extra minutes of air conditioning, a nice rose bush in the front yard, or whatever else you might want to purchase in order to make yourself happier.

Long story short, the political regime in Texas is more affordable for my family than Ottawa, Ontario was. There's a good chance that it's more affordable than where you live, too. It's easy to reject this argument on political grounds, but if you do, you simply have to be aware of the fact that, in your life, paying high taxes for expansive social services that you never use is a form of consumption spending. You pay those taxes to make yourself feel good about your political ideology. That is entirely fair.

But me? I would rather spend that money on my family; that's what makes me feel good. If you're the kind of person who would rather buy your wife jewelry than pay a high tax rate, then Texas has a lot to offer you.

Of course, it doesn't stop there. Housing in Texas is about half of what it was in Ontario, where a semi-detached townhome can easily reach into the $300,000 territory. Here, not only do we pay less for housing, but we get more. Texas has more empty space than any other state in the lower-48, the economy is growing, and Texas developers have gotten extremely good at putting up really nice, comfortable subdivisions with "resort-style amenities" and large, cosmetically beautiful structures. The haters try to dissuade you from this sort of thing by calling these houses "McMansions," as though a large, beautiful house built in a subdivision tailored to suit the needs of a growing suburban population is somehow worse than a smaller, older, and more expensive home in, say, Boston. Yes, it is possible to come up with disparaging words that make Texas housing seem like less of what it is, but at the end of the day, houses here are big, nice, and affordable. Once you get over any underlying snobbery, it's easy to see why people like the housing situation so much here.

So, lower taxes and nicer, more affordable housing. Incomes must be low in Texas, right?

Wrong. Between the Dallas/Fort Worth metroplex and the greater Houston area, Texas is home to some of the largest corporations in the entire world. They're not just energy and cattle-driving companies, either. We have Pepsico, Radio Shack, Intuit, Game Stop, American Airlines, and the list goes on and on. All major accounting and consulting firms have a large presence here. The population is well-educated, tech-savvy, and ambitious. So, not only are there many different kinds of employment opportunities here, the jobs pay very well, relative to the low tax rates and affordable housing. When I first moved here, my salary was identical to what it was in Ontario. Now, it's higher.

To top it all off, we have excellent shopping here, and we're not paying exhorbitant import prices. Food, gas, clothing, and consumer goods are probably not the lowest in the country. I'd put it at about average -much, much lower than urban centers like Boston, LA, and New York City, but not so low as Evanston, Wyoming.

If you really have it out for Texas, it would be easy to wave away the money factor. You could say that moving somewhere just for the sake of money is crass, crude, greedy, and low. You could say, "Sure, you've got your money, but what about quality of life?" This is an entirely fair criticism to make in the abstract. If you decided to move some place solely because it offered you the most financial incentives, you very well might go on to discover that the location doesn't meet any of your other needs. It might feed your belly, but it might not feed your soul. Human life is, after all, about more than materialism.

Yes, if Texas offered high incomes and low expenses in exchange for a very low quality of life, then I would totally agree that it isn't an attractive place to move. But, as I will describe in subsequent posts, the quality of life in Texas is actually pretty good, even by your standards (yes, you).