R.I. gets most ‘wealth-hostile’ ranking

When it comes to “wealth-friendliness,”
the Cowboy State is riding high.

Aided by a strong recovery out West, Wyoming has kept its top spot as
America’s most “wealth-friendly” state according to an exclusive annual
ranking by Bloomberg Wealth Manager magazine released last week, a PRNewswire release stated.

Bloomberg Wealth Manager is Bloomberg’s monthly magazine targeting the
needs of financial planners and investment advisers who counsel the affluent.

In its seventh year atop the “wealth-friendly” chart, Wyoming reigns
supreme when it comes to keeping the wealth in the hands of the breadwinners,
not state government, the release said. A projected surplus of $1 billion over the next two
years will likely continue the trend, Bloomberg Wealth Manager reports.

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Rhode Island, on the other hand, was ranked America’s most “wealth-hostile” state
for the fourth straight year, Bloomberg Wealth Manager said.

Other states earning high marks for “wealth-friendliness”: Nevada (No. 2),
Tennessee (No. 3), Alabama (No. 4), and Alaska (No. 5). The most “wealth-hostile,”
after Rhode Island, include Wisconsin (ranked No. 50 in wealth-friendliness), New
York (No. 49), Vermont (No. 48), and Nebraska (No. 47).

For the annual “wealth-friendliness” survey, co-author Thomas Saler
compared the impact of state taxes on salary, real estate, personal property,
and retirement assets for four hypothetical families. The editors ran research on tax codes and effects in each state.

The results demonstrate how tax bite can vary from state to state, and how each state’s burden can change depending on the nature of one’s assets, the PRNewswire release said. For example, the identical set of financial parameters that generated
a tax bill of $7,259 last year in Wyoming could have cost a family $56,419 in Rhode Island.

In addition, the states’ rankings were compared to the ranking the state
received in 2000. Of note, Hawaii, ranked No. 39 in 2000, moved up to No. 14 this year. New Hampshire, thanks in part to no sales or income taxes,
moved from 27th in 2000 to 12th in this year’s ranking. Massachusetts ranks 25th, up from 35th four years ago.

State tax revenues are finally rising again across the country, with
recent reports showing an increase in state tax revenue of more than 8 percent for
the first three months of 2004 from a year earlier.

Even with a renewed positive outlook for states, Bloomberg Wealth Manager
warns revenue gaps will more than likely lead to tax hikes as states try to
compensate for the estimated $35.6 billion in budget gaps predicted for fiscal
2005.

“State legislators still have to deal with long-term fiscal problems …
as well as a steady decline in sales tax receipts as the economy shifts to
selling more (often untaxed) services rather than (taxable) manufactured
goods,” says Janet Bamford, who co-authored the report for Bloomberg Wealth
Manager.