> Despite TX lacking a state income tax, most Texans pay more in taxes than CA.<p>This is pretty misleading. The report in question doesn't say whether Texans or California's actually pay more per capita - it's entirely as a percentage of the total state tax collected. <a href="https://itep.org/whopays/" rel="nofollow">https://itep.org/whopays/</a> (<i>EDIT</i>: This isn't correct, it's as percentage of income by average income in state, but the brackets are different per state).<p>So it's <i>because</i> they are missing an income tax. But if someone hit you with a 50% income tax next year, you wouldn't consider your tax bill lower just because your share become proportionally smaller.<p>With that in mind, per capita tax in California is ~$6800 and in Texas it's $4400.<p>FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them. The exodus to Texas has less to do with taxes and much more to do with general cost of living, which is still largely a function of state government.
Source:<p><a href="https://itep.org/whopays/" rel="nofollow">https://itep.org/whopays/</a><p>Edit: The report does not include tolls, but I would incorporate tolls into taxes also, especially for lower income groups. One can easily spend $1k to $2k per year in tolls in the Northeast, and I know Texas is quite heavily tolled in some areas as well.<p>Edit 2: The ITEP report also does not incorporate the effects of property tax laws in CA which give people who purchased land earlier and their descendants a much lower property tax liability (proportionally) than people who purchase land later.
I moved from Austin,TX to CA many years ago, and everyone told me I would be crazy moving to a state with over regulation and high taxes. I told them I did the math one day when looking to purchase property, and I'd be paying more taxes in Austin than CA. I also prefer much more over regulation than lack of regulations. And this was wayyyy before the whole fiasco with the winter storm. I am so glad I moved.<p>now if I were to start a business on the other hand, then things would be different.
Nearly all of this is accounted for by property taxes and is really only true in specific locales (Austin). Most of the rest of Texas the overall tax burden is lower than you'd have in other states. Property taxes represented 1.9% of my income when I lived in Texas after my house doubled in value over ten years, My effective tax rate if I lived in California would be 10% of my income to the state, and on top of that sales tax ranges from 1% less to 2.5% more than the sales tax rate I paid in Texas.<p>The only reason this is an issue for people is because of property tax in high real estate cost locales (Austin) compared to California that has wonky property taxes due to Prop 13.
You don't even have to be poor to be worse off in TX. Our household income is a little over $300k, and moving to Austin would raise our total tax burden compared to where we live now. It is not a low tax state.
I remember a local group spreading a "study" around to local news outlets / radio programs and so on about how people in Minnesota were moving out because of the high taxes. But the information they provided didn't really provide much to indicate any sort of "why".<p>Then if you followed the info to the actual study you found that the most frequent destination for the folks moving out of Minnesota was ... California.<p>The point being I'm not sure how many people really move for just "taxes" and a lot more plays into it, and taxes are too complex to say "this state or that state" as it really depends on who you are and your situation(s).
I was surprised to see that Washington state is actually considered the most tax-regressive state, a product of having no income tax...<p>Washington did pass a law to impose a 7% long-term capital gains tax on earnings >250k, but it was struck down in a lawsuit and is now being appealed to the state supreme court: <a href="https://www.seattletimes.com/seattle-news/politics/washington-supreme-court-to-hear-challenge-to-new-capital-gains-tax-bypassing-court-of-appeals/" rel="nofollow">https://www.seattletimes.com/seattle-news/politics/washingto...</a>
From the link:<p>>This study provides important context for those interested in state and local tax policies... It finds that nearly every state fails the basic test of tax fairness<p>If everyone fails the test, perhaps it's not that the test takers are in the wrong, but maybe the test isn't administrated properly.
I feel like there's 19% of people missing in that graph. That 19% is where I fit in and I'm curious about the difference in taxation from one state to the other.
Yeah, my property taxes have gone up a lot in the last few years. I live in a suburb of Austin. They lower the tax rate occasionally, but not nearly enough to offset the rise in home valuations.
This is probably not what it seems, because the overall cost of living (tax included) is nevertheless lower in Texas than it is in California. Sales tax is generally higher in California than in Texas so what is happening with these statistics?<p>This is not to deny that we pay taxes in indirect ways. For example, property tax can be higher in Texas than in California, especially for older properties; and anyone who pays rent is going to pay some surplus in order to cover property tax. Say that a person rents a studio in a major Texas city for 1500 USD a month. With a Gross Rent Multiplier of 10 (probably high for Texas; low for California), that is about 180000 USD of property and it will be taxed at around 1%, or 1800 USD, per year. This suggests that about 150 USD/month of that person's rent in Texas is to cover taxes -- that's considerable!<p>In California, a room in a house in a major city might cost 2000 USD a month; a studio might cost 3000 USD a month or more. Even if the nominal tax rate in California is the same as in Texas, for much of California's housing stock, the tax rate is based not on the current valuation but a valuation from the time of sale -- which can be many decades ago. Instead of paying 10% of their rent to cover taxes, a person in California might be paying much, much less -- 5% or even 1%. Even when they're paying 3000 USD for a studio, then, they might be paying much less property tax.<p>However, a person in California paying 3000 USD for a studio is not better off than someone paying 1500 USD for a studio in Texas, simply because they are paying less tax. They do not have more space, more bathrooms, &c -- they are paying more for the same thing. The focus on tax policy ignores many other policy factors that overall contribute to a more manageable cost of living.<p>Here is a web site you can use to look up Gross Rent Multipliers: <a href="https://apartmentpropertyvaluation.com/gross-rent-multiplier/city" rel="nofollow">https://apartmentpropertyvaluation.com/gross-rent-multiplier...</a><p>Here are the analyses that the Reddit post that the article referenced are based on:<p><a href="https://itep.org/whopays/california/" rel="nofollow">https://itep.org/whopays/california/</a><p><a href="https://itep.org/whopays/texas/" rel="nofollow">https://itep.org/whopays/texas/</a>
This article makes some unwarranted leaps. The fact that lower income Texans pay a larger fraction of their income in tax than higher earners doesn't support the claim that " [l]ow-income taxpayers bear a disproportionate share of the tax burden in those states", since the tax burden of a group is what that group as a whole pays as a fraction of the state's tax revenue.<p>In the absence of income tax, taxes come from sources like consumption (e.g. sales taxes) and other things like property taxes. Lower income people save less money; they spend more of their income and so will pay more of their income in consumption taxes.
"Despite" or "Because"? If income tax is replaced with regressive consumption taxes, wouldn't you <i>expect</i> a bottom-heavier tax base?
After exemptions, I pay 2% of my home’s appraised value in property taxes each year in Texas.<p>50% goes towards primary school + 30% goes to my local city but the money doesn’t seem to impact education outcomes or general quality of life near me.<p>I don’t mind the distribution but it stings when local government seems to be plagued by chronic mismanagement.
The article mentioned a Reddit post without linking to the post, but I think I found it:<p><a href="https://old.reddit.com/r/economy/comments/wjkqdx/low_taxes_for_whom/" rel="nofollow">https://old.reddit.com/r/economy/comments/wjkqdx/low_taxes_f...</a>
I guess it comes down to income tax (California) vs. property tax (Texas). You have to make a minimum income to pay income tax, and many people don't cross that threshold, or if they do not by much, so "most people" pay more in Texas.
While individuals do not have income tax, businesses do. Texas businesses are subject to property taxes, income taxes (the franchise tax), and taxes on total assets (business personal property), as well as sales taxes on services.
Does this account for home assessed value when comparing the property taxes between CA and TX? I know the effective property tax rate is lower for CA vs TX, but the homes are much less expensive in TX.
Californians looking to reduce their tax burden should consider Vancouver Washington. Washington has no income tax and Oregon has no sales tax. Live in Vancouver, drive over the bridge over the Columbia River to Portland to do your shopping. Lots of people take advantage of this loop hole. Just don't forget you don't pump your own gas in Oregon. Rumor has it, gas pumping is a make work program for reformed felons.
I'm not so sure ITEP is so unbiased. Aren't their affiliations generally left-leaning? I do know for instance that they have been openly anti-trump tax policy in the past. As squishy as these kind of numbers are, such statements as "Texans pay more in taxes than CA" should be taken with a huge grain of salt as always.
What about the massive rents that Californians have to pay due to the state's lack of housing?<p>I would argue that since this is completely caused by State and Local governments, you can argue this is a tax levied by the state and distributed to property owners.
Friendly reminder that income taxes are still an awful idea. They disincentivize making income, and income is a wonderful thing. They also make it easy for the top .1% to avoid paying taxes better than the top 10%.<p>Progressive taxes can still be achieved, through property taxes, sales taxes on luxury goods, and taxes on excessive usage of public goods.
That’s bs. In Texas you pay just 1-3% property tax. That’s it.<p>Car registration is dirt cheap (<$100/year), housing is dirt cheap (200k get you a house with a swimming pool), electricity is super cheap (when it is not snowing) and gasoline is almost half price compared to California.
> <i>A recent post on Reddit's main economic forum included a 2018 graphic that shows</i> Texans pay more taxes than Californians unless they are in the top 1 percent.<p>Quality journalism right here.