These retirees fled paradise in Hawaii to shrink their taxes
By Roberta Kirwan

(MONEY Magazine) – In April 1993, retirees Ken Pruett, 58, and his wife Susan, 47, left sun- splashed Honolulu for the rainy precincts of Seattle. Come again? You heard right. The move that this gynecologist and nurse practitioner made was actually a tax move. In Hawaii, they faced the prospect of seeing their retirement income eroded over time by Hawaii's top income tax rate of 10%. For example, the couple paid a staggering $9,531 in state taxes in 1992, the last year Ken worked full time. The couple was also vexed by a 4% Hawaii sales tax that extended even to legal services, rent, prescription drugs and groceries. After they looked into other states without income tax such as Alaska, Nevada and Texas, the Pruetts settled on Washington because of its temperate weather and its affordability. They paid just $200,000 for their 3,600-square-foot house, which sits on 2.6 acres. An added joy: Washington has no capital-gains tax; Hawaii's is 7.25%. Let it rain. -- R.K.