The Miami metropolitan area’s cost of living reportedly has surpassed greater New York City’s. That reality should force a reconsideration of what it means to call a state “low tax” — and whether that’s a real economic benefit across the income spectrum.
A state’s affordability doesn’t turn solely on whether it imposes any one tax. Analysts and policymakers should evaluate tax competitiveness through comprehensive household-burden metrics. This includes insurance premiums, housing assessments, transportation, private schooling, and other costs required to maintain a comparable standard of living.
Through that lens, Florida’s oft-cited tax advantage looks far less universal than its political branding would suggest. Miami isn’t proof that income tax doesn’t affect affordability, but it does show that focusing on one highly visible tax produces an incomplete affordability picture.
Yet that picture is embedded in how Florida markets itself and how tax competitiveness is often measured. Florida’s economic development materials have paired its lack of personal income tax with claims that the state offers a cost competitive environment and a superior quality of life. The Tax Foundation’s 2026 State Tax Competitiveness Index ranks Florida fifth and New York last, highlighting Florida’s zero individual income tax as an advantage.
Those claims accurately describe features of the states’ tax systems but, in the minds of taxpayers, they may conflate three distinct propositions: Florida collects less through income taxes; households in the state bear lower total costs; and residents are economically better off.
When taxes are discussed primarily as burdens to be eliminated — rather than the means to finance public services and institutions — it becomes easy to miss that the underlying costs don’t disappear. They must be reduced, shifted, or recovered somewhere else. The basic economics are familiar: If a restaurant offers free parking to every customer, the parking can become a cost reflected in the food prices.
The same principle applies to state finance. When a state forgoes an income tax or slashes property taxes, it must either provide fewer public services (requiring residents to purchase substitutes in the private market) or raise the necessary revenue through other taxes and levies. Either way, households continue to bear the cost, even if it doesn’t appear on an income tax return.
All discussions of tax competitiveness should begin with comprehensive household-burden metrics, rather than a comparison of income tax rates.
Photographer: Joe Raedle/Getty Images
Because the individual income tax is generally the most progressive major revenue source available to states, replacing it with sales taxes, property taxes, fees, insurance costs, or private services usually shifts the burden down the economic ladder.
That’s where the familiar New York-to-Florida comparison starts breaking down. The usual calculation places New York’s state and city income taxes on one side of the ledger and Florida’s zero rate on the other, with the difference treated as pure resident savings. But that isn’t a genuine cost comparison. It’s a tax rate comparison that assumes services, infrastructure, and household needs that are financed by those taxes either disappear or remain available at no additional cost. Neither is the case.
To the extent a service financed publicly in New York must instead be purchased privately in Florida, the burden becomes less progressive almost by definition. For instance, New York guarantees every four-year-old a free, full day pre-K seat. Florida’s school-year program funds 540 instructional hours, which works out to about three hours per school day. That leaves many Florida working families to pay out of pocket for coverage outside that window.
Similarly, New York’s subsidized transit system allows many households to avoid or reduce car ownership and rely on public transportation. There’s little progressivity in the private market — an insurer, a school, a toll road, a childcare provider, or a transportation network seldom charges a lower percentage of income to households with fewer resources like the income tax does.
The same expense therefore consumes a higher percentage of a middle- or lower-income household’s income and wealth than it does of the ultrawealthy.
Also, Florida’s model doesn’t affect the rich quite the same as the very rich. For someone earning $10 million a year, avoiding a state and local income tax bill can outweigh even the loftiest hikes in insurance premiums, private-school tuition, transportation costs, and other everyday expenses. Those costs may be substantial but still represent a relatively small share of their income and wealth.
The arithmetic changes for the merely affluent. A lawyer, banker, executive, or other professional earning several hundred thousand dollars may save on income taxes, only to see those savings consumed by more expensive housing, homeowner and automobile insurance, multiple vehicles, and any reduction in earnings associated with moving to a lower-paying local labor market.
The same costs that are a blip on the radar for the ultrawealthy can determine whether a professional household is better off after moving, to say nothing of low- and middle-income households.
That’s why all discussions of tax competitiveness should begin with comprehensive household-burden metrics rather than a comparison of income tax rates. The latter provides incomplete information for an individual deciding whether to relocate or what policies to support in the voting booth. Such calculations also should be made across income levels and household types, because a rough metropolitan average can conceal as much as it reveals.
The point wouldn’t be to relabel every private expense as a tax, but to reinforce the public’s understanding of what taxes are intended to purchase. Public-facing tax burden calculators should measure the actual cost of maintaining a comparable standard of living and identify who bears that cost.
On the policy analysis front, serious research would go beyond asking whether a given provision lowers a tax. It would determine whether the policy reduces the total burden on households and how resulting benefits are distributed.
Adopting that framework would make it harder for elected officials to describe policies favoring long-time property owners or very high earners as broad affordability initiatives. It would expose instances in which a state lowers a visible public levy only to shift the same obligation into less visible, progressive, or politically accountable forms.
The Miami-New York City story is a reminder for policymakers — and those thinking about pulling up stakes — that a state’s affordability is much more complicated than a question of individual income taxes.
Andrew Leahey is an assistant professor of law at Drexel Kline School of Law, where he teaches classes on tax, technology, and regulation. Follow him on Mastodon at @andrew@esq.social.
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