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Lets say you work in Chicago and live in Chicago but put your home address as somewhere in Indiana. Then every week you collect the mail that is being sent to you in Indiana. Wouldn't you save a lot of money assuming the taxes are lower? What prevents people from doing this?

CactusCake
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alexcioby122
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  • Are you proposing to buy/rent a property in Indiana and then not live there? Owning property (or renting it) generates a paper trail. The relevant authorities might notice a lack of such paperwork in Indiana, or the additional paperwork generated by the place you really live in Illinois. Buying a place in Indiana and then renting it out might raise flags when they realize somebody else is renting the same property you claim as your primary residence. – Steve-O Feb 15 '19 at 14:48
  • @Steve-O: No just getting a PO Box in Indiana. – alexcioby122 Feb 15 '19 at 14:51
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    Are you asking if this is illegal, or what the state is doing to find out who is breaking this kind of law, or whether the law is enforced when you are discovered? – rumtscho Feb 15 '19 at 14:51
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    @alexcioby122 Right, so then the absence of any evidence that you actually own property in Indiana might beg the question "how does he live there without owning or renting place to live?" – Steve-O Feb 15 '19 at 14:52
  • @rumtscho: Yes,,,, – alexcioby122 Feb 15 '19 at 14:52
  • @Steve-O: I have relatives in Indiana that I can use as a base. Or maybe I just I am a minimalist and like living on the streets. – alexcioby122 Feb 15 '19 at 14:53
  • @alexcioby122 Read the answers. It doesn't matter because it won't get you out of paying Illinois Income Tax. – D Stanley Feb 15 '19 at 14:57
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    @alexcioby122 "Yes officer, I work in Chicago at a decently paying job, and I own property in Chicago, which you have the paperwork for there, but the truth is I spend most of my spare time homeless in Indiana, because I like life on the streets." Have fun with your audits. – Steve-O Feb 15 '19 at 14:58
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    I find it funny that the OP has considered how they can still collect their mail under this scheme, but has not considered the implications of lying to multiple government agencies. – Nuclear Hoagie Feb 15 '19 at 15:11
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    Say you make $100,000 a year but you put on your income taxes that you only made $20,000. Wouldn't you save a lot of money? Sure ... if you get away with it. The sad catch is that the government doesn't just blindly believe whatever you put on your tax return. Sometimes they check up on things, and if they catch you lying, you can face tax penalties, fines, even imprisonment. Do some people get away with it? Sure. Do you want to take the risk? How much tax savings is worth spending a few years in prison? – Jay Feb 15 '19 at 20:10
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    I encourage you to read the federal sentencing guidelines for tax fraud; they are quite interesting. They are rated on, I kid you not, a 43 point scale, because that's the obvious number to base a scale on if you're the government I guess. A normal tax fraud is rated a 6. Paul Manafort's $55M fraud is rated a 38, which gets you 20 years in a federal penitentiary. Now, I know you are considering defrauding a state government, not a federal government, but still, it might be interesting to you to see the magnitude of the fine and jail time for similar crimes to the ones you're contemplating. – Eric Lippert Feb 16 '19 at 16:03
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    Relevant XKCD – gerrit Feb 17 '19 at 09:27
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    @Steve-O I assumed the question was 'whose responsibility is it to notice these incongruous facts, and what is the likelihood that they would'? These facts would obviously point to fraud, but only to someone with the remit to find them out; and then they would only matter to someone with the authority to prosecute. – Tom W Feb 18 '19 at 14:21
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    @Steve-O Ok great, now you have me wondering about the case of a person who works in Chicago but does not own any property anywhere, but who in fact is living homeless in Indiana... –  Feb 18 '19 at 20:38
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    @Michael Congratulations! You have managed to create the concept of a homeless commuter! Wait!... How would he know which stop to get off at? – Oscar Bravo Feb 19 '19 at 07:13
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    @Michael Now we just need to figure out who to sell the movie rights to and we can make ourselves a tidy profit here. – JMac Feb 19 '19 at 17:36

10 Answers10

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Lying to save on taxes is called tax fraud. The threat of large fines and jail-time is what prevents most people from committing tax fraud.

Hart CO
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    Ethics too may play a role in preventing tax frauds. – Pampa Nello Feb 15 '19 at 16:40
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    Is it a tax fraud to travel to Portland, OR to buy things without sales tax if I live and work in Vancouver, WA? – n0rd Feb 15 '19 at 19:24
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    @n0rd Yes, if you do that but do not pay the use tax, that is tax fraud. – Daniel Wagner Feb 15 '19 at 19:48
  • @n0rd isn't it amazing the number of people who don't know that? It would be interesting to see if anyone from Vancouver paid their sales tax in Oregon. Also interesting how many people that think that tax evasion is "Unethical" are willing to evade taxes when they can. – Bill K Feb 15 '19 at 20:34
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    @BillK Tax evasion is unethical but tax avoidance is not, and it's perfectly rational to avoid paying taxes to the maximum extent permitted by law. If the lawmakers don't like some method of avoidance, they have the option of changing the law. – alephzero Feb 16 '19 at 11:47
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    @alephzero of course, that's why the example is so interesting. It is clearly tax evasion but very unlikely to be enforced so those with, umm, loose morals will be most tempted to find a way to excuse themselves from paying it. I actually asked someone in my Vancouver office who holds himself to very high standards if he paid the use tax and he said he does because it's the law. I honestly have never met anyone else who does, but it's interesting to know that someone tries at least. – Bill K Feb 16 '19 at 19:55
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    This is why many retirees ensure they spend at least 183 days (half a year) in income-tax-free states so they can legally claim their residence there. – MooseBoys Feb 17 '19 at 06:52
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    @Bill K: Not everyone thinks tax evasion is unethical. Illegal, yes, but there are a lot of illegal things that are ethical (by my ethics - yours may of course differ), and many unethical things that are perfectly legal. – jamesqf Feb 18 '19 at 18:18
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    @DanielWagner: In most cases, people who physically travel to other states, purchase items, and pay any sales tax that is due there would not be expected to pay any additional property to their own states except on certain kinds of high-value items. Maybe the state of Washington would expect that somebody who buys a bottle of shampoo while in a low-tax state and uses half of the bottle there should pay taxes on the remaining half of the bottle upon returning to Washington state, but I don't think lawmakers realistically expect people to itemize things in such detail. – supercat Feb 18 '19 at 21:04
  • @supercat The taxes actually go to Oregon because I, as an Oregon resident, pay those taxes as part of my home taxes. When you file the paperwork to pay the use tax in Washington, you earmark it to pay me back (Well, technically it would keep my housing tax down for others to share the sales tax burden they are avoiding). If you don't feel that stealing from me is unethical than I suppose there is no reason to file. – Bill K Feb 19 '19 at 17:32
  • @BillK: If the shampoo was purchased in Oregon, that state will have received sales tax revenue based on the value of the whole bottle, even though only half of it won't get used in that state. Arguably, Oregon should only have received tax revenue for half the bottle, and Washington for the other half, but having all tax go to the state of purchase seems much more practical. – supercat Feb 19 '19 at 17:38
  • @supercat Oregon doesn't collect any state sales tax. – stannius Feb 19 '19 at 21:34
  • @Bill K: Oregon has a high income tax, though. The folks coming over from Washington to buy stuff without paying sales tax are increasing the business of the stores. The store owner will pay tax on that increased income, They might well have to hire more workers to handle the extra business, and those people will be paying income tax too, instead of perhaps collecting welfare or unemployment benefits. So those folks are not stealing from you, you are freeloading off them :-) – jamesqf Feb 20 '19 at 18:42
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    @jamesqf sounds like a justification to ones self for not following the law--which was the exact point of my comment. It IS interesting to see how people react when given the option to follow the law or not and just how they want to justify their personal morals. Me personally, if I lived in Washington I wouldn't pay it because I don't want to and they'll never catch me. I also speed quite often (at least 4 over the speed limit), idle through stop signs and jaywalk and have hired illegal workers. Arbitrarily following laws that don't seem necessary is not part of my morals. – Bill K Feb 20 '19 at 19:01
  • @BillK - If you're only driving 4 mph over the limit on a sunny day on an uncongested freeway, that's a bit slow. Please stay out of the fast lane. OTOH, if your "at least 4 over the speed limit" also pertains to school zones when children are going to or returning from school, please stop doing so. At least 4 under the speed limit is more reasonable in that case. – David Hammen Feb 20 '19 at 22:06
  • @DavidHammen exactly. The law isn't as important as the reason behind it. I guess I was pointing out that my personal ethics have very little to do with law and a lot to do with reason and hypocrisy. Those who's morals state following laws is "Right" for everyone else (for example, using "we live in a country of laws" to keep some people out of the country) but can excuse themselves when it inconveniences them (paying Oregon sales-tax) is the opposite of my morals--which is why the Oregon sales tax topic interests me so. – Bill K Feb 20 '19 at 22:31
  • @Bill K: No, my comment was not intended to be any sort of justification. (I don't live close enough to Oregon to shop there - OTOH, I do try to fill up my gas tank when I'm in the county south of me, rather than the one north, 'cause they're about 40 cents/gal cheaper :-)) It was aimed simply at exploding your claim that those Washingtonians who shop in Oregon are somehow stealing from you by doing so. – jamesqf Feb 20 '19 at 22:40
  • @BillK Going 4 or 5 mph over the speed limit in-town is the social norm everywhere I've been, and in general people who match the speed limit exactly (or go slower) are impeding traffic and creating a hazard; usually, matching the speed of those around you is more important than some arbitrary limit. Similarly, idling through stop signs and jaywalking are completely safe as long as you're paying enough attention to your surroundings, and no policeman will bother you about it. Plenty of laws have context-sensitive subtext like that. – DarthFennec Feb 20 '19 at 23:25
  • @BillK I feel like this tax thing is similar. Running a stop sign in a deserted neighborhood and running a red light on a busy street are very different things. Going four over and going thirty over are also very different. You're technically breaking the law, but you're not really the target anyway, so you don't get punished. Similarly, avoiding paying taxes this way for very small personal purchases seems just fine, but if you try to build a business model around it you might get into trouble. – DarthFennec Feb 20 '19 at 23:34
  • I agree--because my morals don't really involve following arbitrary laws. What interests me is the cases where people think it's "Morally correct" to pay taxes, obey laws and not steal (or take money from others) right up until it comes to them paying a tax like this--then they are all too happy to force me to pay the tax on their purchases. – Bill K Feb 21 '19 at 00:57
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The very short version is "laws". The more helpful version is that every state has its own taxation requirements. For instance, if you work in Illinois you are required to file appropriate forms stating what you say your residence is.

Every state works a little differently, so you'll need to review every involved state. Here is a law firm's advice on establishing state "domicile" (residency).

The short version is that you will be required to tell the state you get paid in, and the state you claim to live in (if they have a tax or other reason to care), with yearly filed forms what your status is. Many states you might work in don't actually care where you claim to reside - you pay taxes regardless.

All states have figured out that this is a 'great' and seemingly 'easy' way to dodge taxes, so in my experience if you work/live in multiple states it doesn't matter how honest or correct your taxes are - they will all often request more paperwork asking you to prove what you say about your residency is true. If you do not provide it, they will assume the truth is whatever gets them the most money, and the onus becomes on you to prove otherwise. And the documents they require quickly become non-trivial.

At one point I had to provide copies of birth certificates, driver license and registration, car insurance, lease(s), school records, a signed/notarized statement from myself asserting my proper status, W2s from every job, copies of tax returns in every state I filed and a copy of my federal return, etc. And I had to do something similar for every state I filed in. It all worked out fine - but every state was very keen to cut down on this form of tax fraud (this happened within the last few years).

States with low/no income taxes don't like being used for this, because they lose money too - those states generally rely on other taxes which you will contribute minimally to. States with income taxes where you work and claim not to live aren't keen on such a situation either, because they lose a primary source of income.

So all in all, this is a very well known issue among tax authorities, and they are legally entitled - and usually will nowadays - to demand you provide proof that you meet the legal requirements of the state in terms of domicile and tax status. If you cannot provide the proof, they will make you pay. If they catch you lying, this is tax fraud, and tax authorities really don't mind hitting you with penalties. If you've done this more than once, they will also automatically flag past returns to go back and check, and they are generally quite happy to refer you to the district attorney for additional 'handling', plus penalties. And on top of it, tax authorities have a very unusual presumption of innocence - which is that they tend not to have that. They can go back and say, "well, you were lying/wrong about this thing, so we will assume everything else is wrong and charge you appropriately" - and then you have to prove you aren't in the wrong for every item. This will generally mean you need a lawyer, and they add their own expense on top.

The name of the game is "some people get away with it - so they punish people extra hard to try to discourage you". So don't do it :)

BrianH
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  • "The short version is that you will be required to tell the state you get paid in, and the state you claim to live in, with yearly filed forms what your status is."

    Not completely true. If you're like me and live in a state that has no income tax at all, then there's no annual form to file on which domicile must be claimed for the non-existent state income tax.

     – reirab Feb 18 '19 at 22:03
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    @reirab That's true, good point - I've updated the answer to be more correct on that point. – BrianH Feb 18 '19 at 22:57
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    Until something spectacular happens. The onus actually is on the state, it's just very hard to get it enforced that way. But when you get your home state willing to run interference ... https://www.oyez.org/cases/2018/17-1299 http://www.abajournal.com/news/article/supreme-court-considers-the-value-of-sticking-to-precedent-in-battle-between-two-states/ Yeah the damages are going before federal court, but that CA cannot collect taxes from somebody resident in Nevada contrary to a finding by a Nevada jury is settled. – Joshua Feb 19 '19 at 00:38
  • @BrianH's comment about the presumption of guilt by taxing authorities is something to be taken seriously. A coworker of mine had a dispute with the IRS to the tune of $20K. The IRS withdrew $20K from EACH of his accounts (they could not know in advance which would have $20K available). They kept over $100K for the two years it took him to prove that he was right. The penalties can also be disproportionate as they were rejiggered to punish drug dealers and the Mafia when other options require too much time and effort. Don't mess with the tax man. – JSWilson Feb 20 '19 at 19:25
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Why stop at Indiana? Why not say you live in a tax haven in a completely different country, and not pay any taxes at all, even though you still remain in the same place?

Oh, it's called tax evasion. Right. That thing they talk about on TV all the time these days.

Many people actually do it (though it's usually a little bit more complex, they set up companies in those countries, and get the money through those companies). In some cases, it's actually even legal (see big corporations "parking" their international profits in tax havens to avoid taxation in the US), up to a certain point, though many countries are actively fighting those "loopholes".

But in many cases, it's actually just plain illegal. The country/state where you live in has laws that says you owe taxes on your income based on a number of conditions, such as your place of residence, the source of your income, and so on. In some cases, several jurisdictions may even have a valid claim to tax you (suppose you are an United States citizen living in France and working in Switzerland: all three have a reason to tax you).

There are then treaties to decide who you actually pay taxes to in those situations, but it can quickly become very complex.

If you just plain flat out lie about where you live, you'll end up being caught when they check (and they do check). You'll be asked to prove that you actually live where you claim you do. Rent, utility bills, grocery bills... If you can't prove it, you'll be taxed, and will probably have to pay penalties. And good luck reclaiming what you paid to the other state!

jcaron
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    Parking is where the profit a company made in that country is not re-patriated, or brought home to corporate. It's interesting law and congress has been mulling over what to do it about it for some time. Trump offered grace for companies to bring the profits back over suing them for all of it. Bush offered a similar but lesser used plan too. – Bill Leeper Feb 15 '19 at 19:05
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    Do you mean tax "haven" or is there something actually called a tax "heaven"? Thinking about it, a tax haven would probably FEEL like tax heaven. – user73687 Feb 16 '19 at 07:27
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    @user73687 Ooops, fixed. In french we actually call them "fiscal paradises", so they're indeed closer to a heaven than a haven :-) – jcaron Feb 18 '19 at 08:45
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    @jcaron I like that term even more. Fiscal paradise, definitely gonna steal that haha. – user73687 Feb 18 '19 at 08:46
  • You are conflating 'tax avoidance' with 'tax evasion' they are very similar but the former is legal and the latter is illegal. There's no such thing as legal tax evasion. – JimmyJames Feb 18 '19 at 15:53
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    @user73687 You better pay for it, and don't forget the tax! –  Feb 18 '19 at 20:36
  • @BillLeeper: mulling? They enacted the so-called 'transition tax' in TCJA in Dec. 2017, with effect in 2017 (or more exactly tax years beginning in 2017). There's already dozens of regs/RPs/etc and a whole set of forms/insns and pubs; see https://taxmap.irs.gov/taxmap/ts0/transitiontax_o_28b81c33.htm for a start. – dave_thompson_085 May 16 '19 at 00:25
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What prevents people from doing this?

  • Laws (if you are lying about your residency)
  • Convenience
  • It won't work for income taxes

Wouldn't you save a lot of money assuming the taxes are lower?

According to the Illinois Department of Revenue:

you must file Form IL-1040 and Schedule NR if

  • you earned enough taxable income from Illinois sources to have a tax liability

So just claiming you live in Indiana won't stop you from owing income tax in Illinois. Plus Indiana might compensate for lower income taxes with higher property taxes, so you might actually may more taxes with this scheme.

(I see in the comments you only want to create a PO Box, so this may not apply, but it does apply to other situations where people legitimately live across state lines).

NBA players actually have to pay tax to all states that they play in. Otherwise, every player would move to a state that has no state income tax.

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D Stanley
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    ...and let's not forget that if you are caught that's tax fraud, which is a felony. – DJClayworth Feb 15 '19 at 15:00
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    That thing about NBA players is nuts! Do other people have to pay taxes on commissions they earn from sales made on business trips? – Ian MacDonald Feb 15 '19 at 17:40
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    @IanMacDonald No. It's the location of the company that pays them, and commissions made from sales would be paid by the employer, not the client. – D Stanley Feb 15 '19 at 17:53
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    By the same logic, wouldn't they be paid by their home team and not their opponent? – Ian MacDonald Feb 15 '19 at 17:58
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    @IanMacDonald Good point - I don't know the specifics; maybe they should apply to commissions??? – D Stanley Feb 15 '19 at 18:01
  • On top of this, your employer reports your income to the state too. – Draco18s no longer trusts SE Feb 15 '19 at 18:05
  • @Draco18s yes but most states give you credit for taxes paid to other states, so it should be roughly a wash. – D Stanley Feb 15 '19 at 18:28
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    NBA players do not have to pay for every state they play in, but some states have more stringent requirements along those lines (California is an example). So even if I were to say for my job go on a business trip to California and work in our office there for one week, I would need to pay California state taxes on 1 week proration of my salary. I do not know of any other state this strict. I guess it could also depend on limits etc. I know my son worked at camp in MN, but he was able to claim out of state residency and avoid taxes on that income. We did pay for home state though. – Bill Leeper Feb 15 '19 at 19:03
  • @DStanley Sure, but the point is, there are records beyond your own filing. – Draco18s no longer trusts SE Feb 15 '19 at 19:07
  • The situation where you might potentially save money is if you have income from multiple states. For instance, for several years I had some income from California, some from other states/countries. Had I been a California resident, I'd have had to pay tax on the total; as a non-resident, I only paid tax on the California part. – jamesqf Feb 15 '19 at 23:39
  • This worked in my favor this year on my taxes as I worked less than a month in South Carolina and their income taxes dictates that if you make less than $2,970 in taxable income, you owe zero income tax, so my state refund was the entirety of the income tax I had paid in SC. Lived in NC and worked in NC the rest of the year. – Steve-o169 Feb 19 '19 at 19:29
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Some adjoining states have reciprocity agreements. In those cases it is where you live that determines which state taxes apply.

But if you aren't covered by one of those agreements. Then each state will try and determine if they can claim you.

The states set out in their laws what you need to do to claim residency. They look for things like which address do you have bills sent to, where are you registered to vote, where do you have your drivers license. There ra e also exemptions carved out for active duty military, college students, and workers who are on temporary assignments.

The risk is being charged with tax fraud. You could be hit with interest and penalties. In your example Illinois would claim taxes going back for more years than Indiana will be willing to refund. They could also hit you with other fines for not registering the vehicle, or getting a drivers license, or paying a personal property tax.

Ways you could get caught. Parking a car with an out of state license plate for too many nights. When you get to a point when you need to apply for a benefit from the other state.

I knew somebody who moved states, but didn't tell their company for years. Then their child wanted to go to a school in their new state. They weren't allowed to register for school until they resolved all the issues. It cost them a ton of money.

mhoran_psprep
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  • There are a lot of benefits to being properly domiciled in the state you live in. The in state school one is a big one. I have had to fill out forms for every child that has taken classes at state schools to this effect. – Bill Leeper Feb 15 '19 at 18:59
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    @BillLeeper, for most people, yes. Retired and homeless (by choice) and spending most of my time wandering in Spain, I paid taxes to Oklahoma, even though by their laws I was resident of the last state where I had a home. But Indiana’s laws said I wasn’t a resident unless I still had a home there. And the tax treaty between USA and Spain said I was still a resident of USA. Saving fourteen bucks a year wasn’t worth pushing it, but if I hadn’t paid, Oklahoma probably wouldn’t have thought fourteen bucks was worth fussing over either. I picked Oklahoma because I had a relative there. – WGroleau Feb 16 '19 at 04:36
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To offer a different point of view from the other answers. Each state will have rules about when people will owe income (or other taxes) and what income is to be included in that calculation.

There's nothing stopping you from reading the rules and arranging your life such that you avoid a state's income tax. Some states are aggressive, if I remember correctly, you owe New York income tax from all sources of income by simply owning property in the state regardless of whether or not you even set foot in the state. Some states may require that you be physically present in the state more than 180 days.

Fact of the matter is there will be rules. You just have to follow the rules.

quid
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It's difficult if not impossible to do if you actually live in Chicago, and just have a mail drop in the other state. You'd need to establish effective residency there, by e.g. owning a residence, spending time there, maintaining voter registration, driver's license and so on. All of that is likely to cost more than you'd save in taxes unless you are a) really rich; or b) actually do live in the second state, and just work in the first.

As an example of b, for a couple of years I spent alternate weeks working in California & living in rented lodgings there. The other weeks I'd work from my actual (owned) home in Nevada, where I maintained everything that goes into establishing residency. As a consequence, I only had to pay California nonresident tax on the portion of my income that came from the California client, not on income that I got from my other clients. The critical point here is that I actually WAS a Nevada resident, and had been for many years before taking the California job, so there was no lying about my resident status. It was never questioned, but I could have easily proved it if it had been.

PS: And per comments above, the only reason this actually benefitted me is because only a fraction of my income was from California. Had I had only a single W-2 job in California, I think (though I've never actually worked it out) that I would have paid as much whether I was a resident or non-resident.

jamesqf
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Because there are much easier ways to cheat on your taxes

While moral obligations and legal threats play a part, I believe the main reason is this would be an extremely expensive, difficult way to cheat your taxes.

Why (Low/Middle Income)

1) You must establish residency in a state you don't live in. A P.O. box won't cut it. You've got to show a lease or utility bills. That involves buying or leasing an actual place to live, which will be several hundred a month.

2) Per above, a low/middle net worth individual would spend more faking a residence than they'd save. It's all risk and no reward.

3) Furthermore, low/middle net worth people likely work a 9-5 job, where taxes are taken out of their paychecks before they even see the money. Claiming they don't owe state taxes is likely going to raise a red flag.

Why (High Income)

For high net worth individuals, it's a bit different. They can afford a lake house in a 0% income tax state, and may actually visit a weekend or two a month to get the mail and enjoy the view.

1) They can also afford a great accountant to figure out how to legally not pay taxes in the state they live in anyway.

2) High net worth individuals are likely already itemizing deductions, and figuring out how to make the mortgage interest deduction work in their favor. They've likely also set up companies that hold money and assets for them in a tax-advantaged way.

3) High net worth individuals (many retirees are in this camp) do move to states like Florida which have no income tax. If you're running a company that does business in another state, you may still be required to pay some type of corporate income tax based on where the money was earned.

sevensevens
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0

According to the Illinois Department of Revenue, you must file an Illinois income tax return if “you earned enough taxable income from Illinois sources to have a tax liability[.]” There is a form for residents of Iowa, Kentucky, Michigan or Wisconsin to fill out exempting them from withholding, but not Indiana. “If you received wages, salaries, tips, and commissions from Illinois employers, you are not required to pay Illinois Income Tax on this income. This is based on reciprocal agreements between Illinois and these states.”

So this might be useful if you earn a lot of passive income from investments out-of-state (although in that case the way to make them tax-free legally is to buy muni bonds), or if you want to work in Indiana but live in Chicago, but not if you work and live in Illinois.

Most people who work in Illinois would have state income tax withheld, although the hypothetical tax cheat would have several ways around that.

NL - Apologize to Monica
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Davislor
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I'm surprised no one has yet mention an important reason: ignorance.

Your question (and other answers) assumes people are aware of all the benefits and costs of making such decision. However, we are not rational machines. In reality, we have limited knowledge of the world. There is an amazing article about a recent book on the topic ("The knowledge illusion") here. A nice quote:

Over the last few decades, the ideal of the rational individual has been attacked from all sides. Postcolonial and feminist thinkers challenged it as a chauvinistic Western fantasy, glorifying the autonomy and power of white men. Behavioral economists and evolutionary psychologists have demonstrated that most human decisions are based on emotional reactions and heuristic shortcuts rather than rational analysis, and that while our emotions and heuristics were perhaps suitable for dealing with the African savanna in the Stone Age, they are woefully inadequate for dealing with the urban jungle of the silicon age.

luchonacho
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  • Reason for the downvote please :( – luchonacho Feb 19 '19 at 17:52
  • If your argument is that there are benefits to setting up a secondary residence in order to benefit from the lower state taxes, you should provide some support for that claim - otherwise your assertion that people aren't doing this because of 'ignorance' is unsustainable. And since several answers have already provided this information, this answer is redundant unless it provides some new information on how this setup is sustainable. – Zibbobz Feb 19 '19 at 17:55
  • @Zibbobz Some people do it and benefit. It's then plausible that there are others that would benefit, which do not know they could do it (and which might not do it for other reasons stated above, e.g. risks, ethics). – luchonacho Feb 19 '19 at 18:02
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    If it's plausible, then you should be able to support that theory - all this answer really does is suppose that people can make bad decisions because they don't have all the facts and/or aren't acting on them appropriately. If that were a sufficient SE answer, you could post the same answer on every single question on the site and get upvotes. – Zibbobz Feb 19 '19 at 18:09