Meditations on Kotzebue
How do people decide where to live? Ideally, how should people compare places?
An immediate question: say your best friend of ten years tells you one day that they’re quitting their job and moving to Kotzebue, Alaska. How do you react?
I haven’t done this exactly, but I’m prone to wanderlust, and indecision about that wanderlust, and I’ve definitely repeatedly announced intentions to my friends and family to move to various random places (only to end up staying put most of the time). So much so that it’s one of the defining characteristics of me as a person that most of my friends would point out and laugh with (and at!) me about. I’ve lived most of my life in Texas: Austin, Dallas, Irving, College Station. In the past I’ve lived in New England as well, particularly southwestern Connecticut, where I was born.
Most of my early adult life was characterized by two questions: how can I get out of debt the fastest, and where should I live for the long-term?
At this point in my career, the first question is less of an issue now. I’ve spoken enough about my finances on this mailing list for the quarter, so I’ll spare you. But the second question remains. I currently live in Austin, TX, I went to high school near here, I went to college a couple hours from here, I quarantined during most of the COVID lockdowns here, and I’ve worked most of the jobs I’ve ever had here—even the remote ones. It’s also where most of my family lives and are likely to remain for many years.
These days, I expect to remain in Austin for the foreseeable future. I like it, it makes sense, and it’s accessible to most of my friends and family. Plus, quite importantly, it’s where my girlfriend has based her career. But at some point it’s likely I’ll want to move away. Austin is getting really expensive, the public infrastructure is overwhelmed, property taxes are high and property valuations higher than that. The city is quite NIMBY in a way that’s going to continue to cause problems—the city likes to block new high-density residential development and land-value tax reform simply won’t originate in the land of high property taxes and no income tax.
So, with Austin as a strong medium-term default option, why don’t we go through this exercise together? The objective: choose a city where it makes sense to live for the long term. For this discussion, I’m abstracting away concerns related to my personal life because I don’t want to get into those details publicly: for our purposes here, let’s assume it’s all a wash. This leaves the chief concerns of career, economic health, local culture, and ease of access/travel. Let’s assume I intend to remain in the US and buy a modestly priced home. Let’s also assume that I’ll probably work a remote job where location doesn’t matter, but might not want to do this indefinitely.
As I’ve gotten older I’ve cared progressively more about two factors: where my family is located, and the state and local tax structure of my prospective destination city. According to the last paragraph, we can ignore the first of these, but the second requires us to discount much of the US immediately.1 Obvious high-tax places like California, New York, Oregon and Minnesota are out of the picture.
For nuance, we can consult lists of states by tax burden and find that some states with income taxes have lower property and sales taxes (the top two of these apparently being Delaware and Tennessee), so it’s not necessarily true that a lack of income tax makes for the lowest tax burden. These lists are usually calculated based on actual average tax burdens, so they calculate total taxes across categories using the average home value and the average household income. For me, though, I expect my income, but not necessarily my future home’s property value, to be higher than average. So let’s assume property tax is much less important than income tax, and focus on the states with low or no income taxes.
The list of zero income tax states is: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. If we ignore negligible income tax (let’s say less than 4% in the highest bracket), we can also add North Dakota, Pennsylvania and Indiana.
Here’s my impression of each of these right now, as unbiased as I can muster:
Alaska: beautiful, outdoorsy, the lowest-possible taxes and a small basic income, very cold (which is a huge plus for me), mostly cheap, but very remote, expensive to travel around, and a generally unhealthy economy with almost zero local tech jobs. Very few people choose to move there. Also: earthquakes and a bad time zone (UTC-9 standard time).
Florida: cheap, accessible, culturally diverse, lots of beaches, lots of cities to choose from, but humid, hurricanes, and nobody I know ever goes there or wants to go there. Good time zone.
Indiana: I hear good things about Indiana, I like the climate, and the tax situation seems workable, but I’m not all that interested in it as a place. I kept it on the list because I have a family connection here—it’s the other place my parents may live in retirement—but otherwise I wouldn’t really consider it.
Nevada: libertarian, also quite outdoorsy, access to casinos (not really my jam, but I guess sometimes?), close to lots of beautiful cities to visit on the coast and in the southwest, but tourism-focused and very hot and dry. Likely to cause me, a chronically-dehydrated person, health problems.
Texas: where I live already! Also makes sense in terms of income taxes, social connections etc. and is pretty cheap pretty much everywhere except Austin. Downsides: hot, high property taxes, kinda bored of here because I’ve been here most of my life.
Washington: same good tax structure as Texas (except they just introduced a capital gains tax, I guess), Seattle is really cool, beautiful forests and mountains, great climate, and a state where lots of tech workers live. No major downsides, in my view, except that Seattle is rapidly becoming more expensive and experiences lots of cultural conflict. The city of Vancouver, Washington is probably the most tax-advantaged place to live in the Lower 48 because you can live and work in Washington where there’s no income tax, and buy stuff in Oregon where there’s no sales tax.2
I would never realistically choose to move to either of the Dakotas, Pennsylvania or Wyoming because I’m just not interested (and I had a particularly bad experience in Philly at the beginning of my career), so I won’t go into detail about those—they’re disqualified!
I think this is as far as I can take the exercise without diving into precisely which cities in each place are the most compelling to me personally and why. I’ve tried to write up that sort of thing before, but because I haven’t personally lived in most of these places it inevitably devolves into speculation—uninformed speculation at that—of the sort that would bother anyone who actually had experience living in the place I’m critiquing. The best I can do is provide this overview of the tax situation and very basic, limited other commentary that’s probably wrong.
You’ll notice how silly this exercise is when it’s framed this way: does anyone really make a choice about where to live with a listing exercise like this? Maybe it could be helpful, but most people move somewhere for personal reasons. Plus it’s really hard to create a coherent decision space when you’re comparing fractally complicated things.
So: which is the objective best choice? Eh, at best it’s an impossible question to answer. At worst, it’s an incoherent question on its face.
Whose city is it, anyway?
The reason I’m so interested in the question, though, is the idea that certain parts of the US have unique cultural characteristics that you can’t quite quantify. Consider this thread by Kanjun Qiu:
I encourage the reader to stop and read the entire thread. What a fascinating series of takes! I go back and forth all the time on whether I think different US cities have cultures distinct enough that you can coherently discuss their differences. Kanjun’s insights in this thread intrigue me and make me feel rather more comfortable with the cultural differences between places.
Discussing these things is always a matter of averages. You can find any personality in any place, but the question of the culture of a place itself can only be discussed in the aggregate: what sort of person tends to keep living there after they finish their education? What sort of companies does the place have and in what proportions? How much outside investment does the place receive? How safe is the place, relative to other places? What routes are served by the local airport, if any? These are coherent questions.
Of particular interest to me personally is the first question above: “what sort of person tends to keep living there after finishing their education?” Of course, such a qualitative question like this can only have vague answers, and so I like to travel and meet people and speculate on what a place offers to its residents.
Some places are well-managed. I get the impression that some cities handle their growth well and others don’t. There are qualitative aspects beyond the economics, too: does the city offer lakes, beaches or mountains? Is there a good variety of local restaurants? How are the schools? Is the population large enough to support specialized shops, hobbyist groups, etc.? Or is it small enough where getting involved in local government isn’t that hard and you might actually want to do it? How do these factors interact with your own life plans and priorities?
This is why I’m reticent to give or receive any advice about where to live. A person is a complex web of many interconnecting priorities, biases and ideas for their future. A place is a complex web of many interconnecting people like that. For those who consciously choose to live somewhere specific, the choice is invariably so complicated and personal that nobody could really be expected to benefit by emulating someone else’s choice or accepting generic advice.
Some people with college educations choose to live in Kotzebue, AK even though they could leave if they wanted to. Some unknown number of people choose to deliberately move to Kotzebue, AK. Some people move to Russia. &c. They have their reasons, many of which are probably incommunicable to others by virtue of how personal they are.
So if your friend makes that move, my official advice is to not worry too much about it. They also have their reasons. My unofficial advice is just to check in and make sure they’ve thought about it, but without asking them to summarize their entire position on the matter with you unless they want to. That seems like the most courteous path to me.
I don’t have a friend who’s making this move, but I do have a friend who moved to San Rafael for no apparent reason, and another who spent eight months living in Maui working a telesales job, and another who has moved into and out of New York City at least eight times in the last year. I trust they have their reasons.
The fragmented nature of US tax policy remains ridiculous and could fill an entire other essay, but that’s a matter for another time..
This is technically not lawful (as you are supposed to compensate Oregon if you buy stuff there specifically to leave the state with it), but people do this all the time and it’s pretty much unenforceable except on big purchases like cars.