Including
the Impact of Coast-to-Coast Tax Differences On Cost-of-Living Comparisons
For the millions of professionals willing to consider
relocation from their present area to a new area to advance their careers and
incomes, cost-of-living differences between the two areas become a vital factor
in salary negotiations.
Meanwhile, for employers seeking to attract urgently needed professional
talent to their own area from other areas, cost-of-living differences between
areas become an equally critical factor in making competitive salary offers.
Indeed, a recent study by one of the nation's largest coast-to-coast
moving companies shows that 53% of job candidates who reject employer
relocation offers do so because of the inability to reconcile cost-of-living
differences with compensation levels.
The cost-of-living data presented here is designed to enable employers,
employees, relocation firms and others to compare cost-of-living differences
accurately, between different areas and to make the adjustments required to
negotiate mutually acceptable compensation match-ups.
In sharp contrast to comparative cost-of-living data based exclusively on
costs of goods and services (food, clothing, shelter, utilities, transportation,
health care and other miscellaneous items) the data presented here incorporates
a vital additional cost-of-living element: Taxes.
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TAXES: Every American's
Biggest Cost-of-Living Bite
According to a 1999 report by the Washington, DC-based Tax Foundation
research organization, the average American spends 35.4% of his or her total
income on taxes, more than he or she spends on food, clothing and shelter
combined.
Americans' tax dollars are spent on such cost-of-living essentials as
roads, police, schools, Social Security, national defense, Medicare, etc. And
those tax costs differ just as radically between U.S. areas as do the costs of
goods and services on which Americans spend the balance of their incomes.
Consider local taxes, for example. New York City residents currently pay
annual city government taxes which are more than seven times as high as their
in-state neighbors in Albany, NY, and more than ten times as high as residents
of the average city in Mississippi. Residents of Washington, DC, pay the
nation's highest annual city per capita taxes. Among the lowest is Wyoming.
The Added Impact of State
& Federal Tax Variables
In addition to differences in city and other local taxes, wide variations
exist in state taxes (which impact residents of every city within the state).
Residents of seven states, for example, pay no state income tax (Alaska,
Florida, Nevada, S. Dakota, Texas, Washington and Wyoming). Meanwhile,
Montanians pay a bracketed state income tax rising up to 11 percent, and
Massachusetts residents' state income taxes bracket up to a state high of 12
percent.
Moreover, state general sales and use taxes, the largest single state tax
bite (larger than state income taxes) range from zero in Alaska, Delaware,
Montana, New Hampshire and Oregon, to as high as 7% in Mississippi and Rhode
Island.
Even at the federal tax level, residents of different states pay widely
different income tax amounts, based on their income bracket. Connecticut
residents, for example, now pay an average per capita $11,395 in federal taxes
annually. By contrast Arkansans pay only $4852 per capita-more than 57 percent
less.
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Combining Taxes + Goods
& Services Provides True Cost-of-Living Picture
The area cost-of-living "Factors" in this information were
generated by combining and merging tax data from the Tax Foundation, U.S.
Commerce Dept. and numerous other major tax research organizations, with
goods-and-services-only data from the American Chamber of Commerce Researchers
Association.
Like the Association data, all tax data have been weighted to reflect
cost-of-living comparisons based on an upwardly-mobile, professional,
mid-managerial standard of living. And, like the Association "Index"
numbers, the "Factor" numbers here are based on an overall average of
"100", with each area's Factor number expressed as a percentage above
or below that average. Excise, sales and use taxes already included in the costs
of goods and services analyzed by the Association have been excluded from the
overall tax portion of the combined data.
Significantly, the merging of tax costs with goods-and-services costs
generates area cost-of-living Factor Numbers which are different from the
Association's goods-and-services-only Index Numbers, with some two-thirds of the
Indexes decreasing (by as much as double digit percents). What's more, the most
significant differences occur within the nation's TOP 25 largest Metropolitan
area counties, which alone account for some one-third of all U.S. workforce
jobs.
All data presented are based on the latest research material in hand at
the time of compilation, from sources widely regarded as reliable. However the
data published are subject to errors, omissions, changes and withdrawals without
notice. Data in this calculator were researched and compiled by The firm, founded
in 1963, specializes in providing employers,professional-level job candidates and
others with comparative national, regional and local compensation data guidelines.
The firm's annual surveys have served as
reference points in every major professional discipline and industry group,
including engineering, computer, accounting, human resources, health care,
retailing and food. These surveys regularly generate national news coverage in
major business and professional media.
© 1999-2000 Dowden & Co All rights reserved.
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Our intention is to update the FAQ's as more questions come to our
attention. Please send CCI/USG an e-mail if you have any questions that are not
addressed here, or contact CCI/USG at 281.493.9700.
1. When I enter my salary
the figures indicate an hourly wage.
2. Is any
documentation available addressing how this data was compiled?
3.You don't have
the city listed that I am interested in. Can you give me that information?
4. Why don't you have any
information listed for Maine and Rhode Island?
5. Why do these numbers
differ from those that I get from other comparisons?
6. Do you have
cost-of-living information for countries other than the United States?
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1. When I enter my salary the figures indicate an hourly wage.
The calculations do come back as an hourly rate from time to time. In this case
just add the zero's to the number given. For example if you entered 30000.00
(thirty thousand dollars as your annual salary) and your answer came back as
$32.50, then in actuality you would need to make $32,500 (thirty two thousand
five hundred dollars annually).
Here is a tip on how to enter the figures.
Do NOT enter dollar signs or commas. All you have to do is enter your annual
salary as a single run of numbers. For example, just enter your annual salary as
30000 (thirty thousand), and your annual salary comparison will be displayed
properly with the decimal point.
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2. Is any documentation available addressing how this survey is compiled?
This is it. You can scroll up or down for more information about the survey. We
suggest you take a look at the "ABOUT" section which also includes the
telephone number of Dowden & Company.
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3. You don't have the city listed that I am interested in. Can you give me
that information?
We don't have any more information other than what is listed here. Try entering
a nearby city. We would also suggest contacting the Chamber of Commerce local to
the area for which you are seeking the cost of living information.
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4. Why don't you have any information listed for Maine and Rhode Island?
Maine and Rhode Island have chosen not to participate in the Cost of Living
comparison, therefore we have no data on either state.
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5. Why do these numbers differ from those that I get from other
comparisons?
While we can't speak for the other comparisons, this one includes taxes which
are not included on most other surveys.
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6. Do you have cost-of-living information for countries other than the
United States?
No. The only country for which we have cost-of-living information is the United
States.
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About the Data
The data presented here was researched and compiled b Founded in 1963, Dowden specializes in providing
employers, professional-level job candidates and others with comparative
national, regional and local compensation data guidelines. The firm's annual
surveys have served as reference points in every major professional discipline
and industry group including engineering, computer, accounting, human resources,
health care, retail and food. These surveys regularly generate national news
coverage in major business and professional media.
All data presented here is based on the latest research material in hand
at the time of compilation, from sources widely regarded as reliable. However,
the data published are subject to errors, omissions, changes and withdrawals
without notice.
If you would like more information pertaining to the salary survey or the
cost of living page, you may contact
Career Consultants and The Unix Solutions Group at 281.493.9700.
© 1999-2000
Dowden & Co All rights reserved.
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