Let's face it - being rich is a pretty sweet deal no matter where you live, but choose the right state and it could add considerably to the benefits of wealth.
The following is an analysis of the best and worst states for being rich. The points raised might give you some ideas about where to pursue your wealth, or where to enjoy it.
What is Considered Rich?
First of all, what is considered rich? The uber-wealthy - the Warren Buffets or Mark Zuckerbergs of the world - are pretty easy to identify, but to set the bar at a more attainable level, consider elite wage earners as those with incomes in the top 10 percent of their peers. Significantly, the top 10 percent can be at very different income levels from one state to another.
Income: How much the top 10 percent earn
For example, the top 10 percent in Massachusetts earn at a higher level than anywhere else in the nation, with those in that elite group pulling in at least $116,060 per year. The top tier is not nearly so elevated in Mississippi, where a relatively modest annual of income of $66,740 ranks in the top 10 percent. That's the lowest such level in the nation.
Taxes: Still rich after taxes?
Of course, as any wage earner knows, it's not just how much you earn but also how much you keep after taxes. For example, the level of the top 10 percent earnings tier in Washington is 8th in the nation, but because the state has no income tax, those earnings rise to 3rd overall on an after-tax basis. In the process, Washington vaults over states such as California, which has the highest state income tax structure in the nation.
Property crime: Losses could affect wealth
Speaking of how much of your wealth you keep, people who have a lot to lose tend to be especially concerned about the security of their property, and that security also varies significantly from state to state. Washington may be free of income taxes, but its residents are especially taxed by crime as the state has the highest rate of property crime in the nation.
In fact, if you live in Washington, you have twice as much likelihood of being a victim of property crime as if you live in Vermont, which has the lowest rate of such crimes. While that may not surprise you, Washington's property crime rate is also twice as high as those of New York and New Jersey.
MoneyRates.com took all the aforementioned factors - the level of the top-10 percent income tier, state income taxes and property crime rates to come up with the following lists of the best and worst states to be rich.
10 Best States to Be Rich
The top-10 percent income level in Massachusetts is $116,060, the highest in the nation. The top state income tax tier is about average, so high earners are not overly penalized in Massachusetts, while the fifth-lowest property crime rate should make wealthy residents feel relatively secure. Among those residents: Abigail Johnson of Fidelity Investments fame, who has around $15 billion in wealth, according to a Forbes Magazine study of the richest people in every state.
At $87,710, the top 10-percent wage tier ranks only 20th nationally, but Pennsylvania is a good example of why there is more to wealth than just how much you earn. With the 10th lowest tax rate on top earners, and one of the 10 lowest property crime rates, Pennsylvania is a good state for both making and holding onto your money. Among those who apparently agree: Mary Alice Dorrance Malone, whose family made its fortune by founding the Campbell Soup company.
3. Alaska (tie)
This is one of nine states where earners in the top 10 percent make at least $100,000 a year, and Alaska is also one of seven states with no income tax. That's a strong enough combination to offset the fact that Alaska's property crime rate is higher than that of most states. Though this is just one of seven states with no billionaires, its richest residents, Leonard Hyde and Jonathan Rubini, are doing just fine with an estimated $340 million apiece.
3. Virginia (tie)
The strong points were ranking 6th in top-tier earnings level with the 8th-lowest property crime rate in the U.S. Among those benefiting from this positive combination: Jacqueline Mars, as in Mars Bars and other candy.
5. Illinois (tie)
Though it didn't crack the top 10 in any individual category, Illinois was one of the best 15 states for top-tier earnings, reasonable taxes and low property crime rates. One prominent beneficiary: Ken Griffen, an investor worth an estimated $8 billion.
5. New Hampshire (tie)
Like Illinois, New Hampshire made the top 10 by being consistently good in each category rather than spectacular in any one. A noteworthy resident: Andrea Reimann-Ciardelli, an heiress worth an estimated $1.1 billion.
This and Alaska were the only two of the seven states without income taxes to crack the top 10, so there is more to providing a good environment for the rich than tax avoidance. Wyoming also benefits from the 11th lowest rate of property crime nationally. The wealthiest person to call Wyoming home: John Mars, who like his sister Jacqueline in Virginia has found the chocolate business to be pretty sweet.
Top-10 rankings for income and reasonable taxes were enough to overcome a so-so rate of property crime. One person enjoying wealth in the Rockies: Dish Network founder Charles Ergen.
Some cities in Michigan have had well-publicized fiscal woes in recent years, but it is not a bad place to be rich. The top-10 percent income level ranks only 21st, but it improves on that overall by being in the top 15 for reasonable taxes and low property crime rates. The wealthiest resident: Daniel Gilbert, who you may know best as owner of the Cleveland Cavaliers (in other words, he's LeBron James' boss) but this Michigan resident made his real money by founding Quicken Loans.
10. New York
It's no surprise to see a state so heavily associated with the financial sector here, and at $114,750, New York's top-10 percent income level is second only to that of Massachusetts. What may surprise you is the fact that New York has the second lowest rate of property crime in the nation. However, with a top tax bracket of 8.82 percent, the state is one of the worst for soaking the rich. Among those willing to pay that toll: Michael Bloomberg, who built his eponymous financial information company into a fortune worth around $50 billion.
10 Worst States to be Rich
50. South Carolina (worst)
The top-10 percent earnings level in South Carolina is just $74,990, more than $40,000 less than in Massachusetts. Residents also have to put up with the third-highest rate of property crime, and a top tax rate that is higher than in most states.
This is one of the 10 worst states for earnings levels and property crime rates, and the top tax rate is higher than in most states.
Taxes are around middle of the pack, but the top-10 percent earnings level and the property crime rate are both among the 10 worst.
While neighboring Wyoming made the top 10 overall, Montana's sharply-lower earnings plus its higher crime and tax rates put it in the bottom 10.
While not a great state for earnings, Iowa's biggest problem is its 8.98 percent top income tax rate, fourth highest in the nation.
44. Hawaii (tie)
The top-10 percent earnings level here is higher than in most states, but the tax and property crime rates are high.
44. Mississippi (tie)
Besides ranking dead last for the earnings level of its top 10 percent, Mississippi also suffers from a property crime rate that is the 15th highest.
The earnings level isn't bad, but the top tax rate is second highest in the nation.
While not bad for taxes, Tennessee's earnings level and property crime rates are among the 10 worst.
It's not terrible in any category, but Nebraska is about average for property crime and below average in the other two categories.
Online Investment Resources to Grow Wealth
Earnings levels, taxes and crime rates might vary significantly from state to state, but one great equalizer that has emerged for those with wealth to invest is the wider availability of financial management resources.
Whether it is finding the best jumbo CD rates or the most cost-efficient ways of investing in stocks, people were once somewhat limited to financial institutions that were relatively close nearby. Now, with online brokers and banks, people in Hawaii or Alaska can have access to many of the same investment options as those in New York.
Making wise investment choices underscores one of the lessons from this survey. Being able to make a top-tier income is just half the battle. Holding onto that income and investing it wisely is how people become truly rich.
Full Ranking of Best and Worst States to be Rich
Didn't see your state in the best or worst lists? Find out where your state ranks and compare.
|5 (tie)||New Hampshire|
|12 (tie)||New Jersey|
|15 (tie)||North Dakota|
|30 (tie)||New Mexico|
|38 (tie)||West Virginia|