In these 311 SMSAs, the entire SMSA lies entirely within either a RTW state or a non-RTW state. RTW states tend to cluster in the South, Plains States, and Rocky Mountain region. All have common borders with one or more other RTW states. Table 1 lists alphabetically the 129 SMSAs in the 21 RTW states and Table 2 lists the 182 SMSAs located in non-RTW states. Averages for each variable are reported at the end of each table.
Federal taxes are based on money income and are progressive, i.e. , the tax rate rises with income.
But the real difference comes after adjusting for cost of living. Thus, on average, residents in SMSAs in states without RTW laws pay 24.5 percent more for food, housing, health care, transportation, utilities, property taxes, and college tuition than residents in RTW states. In SMSAs where incomes are high, taxes and the cost of living are generally high as well. In states without RTW laws, high taxes and the high cost of living erode the purchasing power of income so much that families in states with RTW laws are, on average, actually better off. Stated another way, low taxes and low or moderate cost of living costs can easily offset lower hourly rates of pay, as the evidence presented in this study reveals.