Some rates of taxes in Texas are higher than in other states. For example, Texas is known as one of high property tax rates in the United States. Each of the country's 84 million single-family homeowners paid an average of 3.296 in property taxes which amounts to an average 1.15 effective tax rate Brinkley Badgett 2017. In contrast, Brinkley Badgett 2017 mentions that in Texas the effective tax rate is 2.06 which is the second-highest among the fifty states in America. Property tax is related to almost everyone when they buy their own house so that means that people in Texas pay more money for a house than those in other states. Since Texas does not have a state income tax the government relies on the property tax in order to fund services such as school. However, the funding for the school is not enough for all schools in Texas. In fact, in some school, they cannot receive enough services such as school lunch. Moreover, not only the rates of property tax are high but also sale tax. Texas collected 1.226 in sales taxes per capita in fiscal 2015 the sixth highest sales tax collection of all states Stebbins 2017. This suggests that Texas might not be a tax-friendly state. However, according to Bernardo R Writer S 2017 the overall tax burden in Texas is 7.99 which ranked 34th among the fifty states, In addition, Texas ranked No 4 the list of best states to make a living with an average income of 35.480 and a 5 percent unemployment rate Gould 2017.
From these results even though some taxes are high in Texas people who stay there are satisfied with them and pay fewer taxes than most of the other states. It can be said that some people can save money compared to other states The divide between the poor and the rich Perhaps the decision not to have a state income tax makes the widening income gap worse. Texas ranked seventh-worst in the gap between rich and poor. The incomes of the richest 5 percent of households were 14.3 times bigger than those of the poorest 20 percent Campbell 2014. While the state is known as one of best states it is also known as a leader in income inequality. Furthermore, in Texas, more children became poor due to the low-income tax. According to MacLaggan 2013, There was a 47 percent increase in the rate of Texas children living in poverty from 2000 to 2011 according to the Kids Count report by the Center for Public Policy Priorities a liberal think tank that advocates for low-income Texans.
Thus wealthy and middle-class people do not have any problems to live in the state but it threatens the living of the poor including children. On the other hand, though poverty is a problem in Texas it is also true that the state lacking an income tax helps rich people. According to Dzombak 2014, there are 51 billionaires places third. Because they have plenty of gas and oil in Texas there are many energy industries and these make people richer. The rich people not only earn a lot of money but also they contribute to the improvement of economics. Hence the state's lack of an income tax helps more wealthy people but the problem of poverty still remains to solve so it might be said to be a drawback. Economic growth Many people say that income tax does give an impact on the economy but it depends on measurements. States without income taxes may or may not perform better than states with income taxes. For example according to Tsang 2014. The nine states with the highest individual income tax rates had better change in median wage 0.7 percent to 3.5 percent and significantly better growth in state GSP per capita 10.1 percent to 8.7 percent. On contrast there is another study by using a different set of measurements and got a totally different result. Tsang 2014 states the following Laffer and Moore look at the average growth from 2001,10 for each set of states in four factors population.
Gross State Product GSP GDP but for states employment and state and local tax revenue By each of these four measures, the nine states without an income tax outperform the high tax states Both studies are true so it is hard to determine whether the states without an income tax perform better or not. However, as for Texas, the population growth contributes to improving the economy. As more people move to Texas from other states every year so that the population has surprisingly increased Liebig 2017 states the following. According to new statistics released by the US Census Bureau, four Texas cities ranked in the top five of the fastest-growing cities in the US. The data shows that between 2015 and 2016 the Houston suburb of Conroe grew by 7.8. The Associated Press reports that percentage is 11 times higher than the national average. This result suggests that low-income tax has an advantage economically If more people come to Texas to immigrate more taxes can be collected and then the money can be used for many things such as health, insurance, and social security. Therefore, Texas's decision not to have a state income makes Texas better because of the economic growth the result of state rankings and the divide between the poor and the rich. It might make the problem of poverty worse than before, but the problem is not only in Texas but also in other states as well, so people should look at the merits rather than its demerits. Furthermore, if more people move to the state and collect more taxes perhaps the government can give more support to people in poverty.
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