How Just Choosing a Home State Can Make You Poorer
NEW YORK (MainStreet) The real-world value of $100 has receded over the years, thanks to the steady drip of inflation eating away at the value of a dollar, and that costs consumers at the checkout line, when paying bills and in paying for big-ticket items such as homes and college.
The value of $100 in 1969 dollars would be worth $645 now, while the value of $100 from 2014 would only $15.50 in 1969. That tells you how much inflation eats away at your money over time.
To further illustrate the point, check out:
Try getting a good home for $28,000 or a gallon of milk for barely over a dollar today and you begin to appreciate how inflation can affect the value of the dollar (or a hundred-dollar bill).
But the value of a $100 bill isn't all about the rate of inflation - it's also affected by where you live.
That's the premise of a report from the Tax Foundation looking at the best- and worst-value states for spending a $100 bill today.
For example, in Tennessee, $100 is really worth $110.25, while in Hawaii it's worth only $85, according to The Tax Foundation. As the report authors attest, that means citizens of the Volunteer State are 10% wealthier than their annual incomes say, while residents of the Aloha State are actually about 15% poorer than their nominal incomes.
Here's the Tax Foundation's list of states where $100 is valued the least, relative to the rest of the country:
- District of Columbia ($84.60)
- Hawaii ($85.32)
- New York ($86.66)
- New Jersey ($87.64)
- California ($88.57)
Here are the states where $100 stretches the furthest:
- Mississippi ($115.74)
- Arkansas ($114.16)
- Missouri ($113.51)
- Alabama (113.51)
- South Dakota ($113.38).
"A person who makes $40,000 a year after tax in Kentucky would need to have after-tax earnings of $53,000 in Washington, D.C., just in order to have an equal standard of living, let alone feel richer," The Tax Foundation says.
By and large, the authors say, states that cost a lot to live in have citizens with higher annual incomes than low-cost states. That's not true everywhere - North Dakota is a value consumer's dream, with both low costs and high average income, for example. In addition, high-cost states usually have high higher tax burdens than low-cost states, which eats into income values.
But the Tax Foundation data show largely that in terms of buying power, it's probably better to live in Kansas than New York (if you ignore the difference in lifestyle.)
That's worth noting, but maybe not enough to load up the moving van.
By Brian O'Connell