On the heels of yesterday's news that Janet Huckabee has changed her residency to the state of Florida, former Gov. Mike Huckabee has done the same, registering as a voterin the Sunshine State. Sarah Huckabee told the Arkansas Democrat Gazette (subs. required) that her father’s work activities were a major motivation for the move. The fact that you don’t have to pay income taxes in Florida probably doesn’t hurt either.
We wondered about some of the legal issues involved in changing one’s residence, so we talked to Tim Leathers, deputy director and commissioner of revenues at the Department of Finance and Administration. On the jump, he told us what constitutes taking up residence in another state and what happens when the state disagrees that someone has actually done so. Also, take an early look at an editorial from our print edition this week that says those who move to states without income taxes from those that do might not get quite as sweet of a deal as they might think.
UPDATE: Suzi Parker, writing for Politics Daily, has an interesting tidbit. It's all the media's fault. Close Huckabee associates say he is "tired of being watched and criticized by Arkansas' media even though he is no longer in office."
Residency, Leathers says, is all based on intent and totality of the facts - where the taxpayer is spending their time, where their kids go to school, where they're voting, where they get their driver's license. You have to claim residency to vote, so that's usually a pretty clear indication, he says.
"The courts would look into it if we disagree with them - if we think they're really still an Arkansas resident - and they object to that," Leathers says. "You might have somebody that claims residency in Texas, but if you look at the circumstances, they’re still voting here, their license is still here, they still have property here. We might look at that and say they're still an Arkansas resident, and asses the tax on it and we do that. We have those audits from time to time and tell people based on the fact situation as we know it, they have not abandoned their residency."
Asked whether the high-profile move by the Huckabee's would draw any special attention from the state, Leathers said, "I couldn't comment on any particular taxpayer even if I knew."
As we point out in this week's editorial from the print edition, if someone does indeed move because of the perceived benefit of not paying Arkansas income taxes, they might not be getting as sweet a deal as they think.
News that at least one Huckabee has moved to Florida arrived as we were pondering, more or less, a study showing that residents of states without state income taxes, such as Florida, pay more in federal income taxes than do residents of states that have an income tax, such as Arkansas.
The Institute on Taxation and Economic Policy examined the effect of the federal income tax deduction that taxpayers can take for the state and local taxes they pay. “Substituting an income tax for a sales tax would keep the total revenue raised by the states the same, but would substantially reduce the federal tax bills of the residents of these states,” ITEP says. Federal taxpayers can deduct state sales tax payments as well as income tax payments, but ITEP says the sales tax deduction “offers a small benefit and the low- and middle-income people for whom sales taxes are most burdensome generally do not itemize their federal tax returns, while the income tax deduction offers a much larger tax benefit and the beneficiaries – mostly upper-income taxpayers – are very likely to itemize.”
We say those who’d leave Arkansas for Florida deserve to be hoist by their own petard.