this post was submitted on 28 Jul 2023
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[–] [email protected] 15 points 1 year ago

Loads for me on FF mobile, here's the full article::

Those coming to Texas for a tax break may want to turn around if they are not in the top 1 percent of earners.

A recent post on Reddit's main economic forum included a 2018 graphic that shows Texans pay more taxes than Californians unless they are in the top 1 percent. The post is one of the highest-rated in the last month on the social media platform. It is unclear why the post was shared now.

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The graphic is of data from the sixth edition of the Institute of Taxation and Economic Policy's "Who Pays" series, which tracks tax data for all 50 states and Washington, D.C. The last time the nonprofit released data was in 2018, but it is expected to release updated findings later this year.

Texans in the bottom 20 percent of income earners — those earning less than $20,900 — pay 13 percent of their income in state and local taxes, while those in the top 1 percent of income earners — those earning $617,900 or more — pay only 3.1 percent.

In California, the bottom 20 percent of income earners — those earning less than $23,200 — pay 10.5 percent in state and local taxes, while the top 20 percent — those earning $714,400 or more — pay 12.4 percent.

Texas was the second-most regressive tax state, behind only Washington. Low-income taxpayers bear a disproportionate share of the tax burden in those states, according to the nonprofit. California, meanwhile, is the most progressive tax state because people in higher tax brackets pay higher tax rates.

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"Every state has some regressive taxes on the books," said Carl Davis, a research director at the nonprofit. "Whether that be sales tax, motor fuel tax, tobacco tax, even property tax is somewhat regressive."

However, unlike other states, Texas has no "progressive counterbalance," Davis said, because there is no state income tax.

Robert Peroni, a tax professor at the University of Texas at Austin School of Law, noted that the "Who Pays" series appears to base its results on real-world data and policy. Nothing substantial has changed in the state tax-wise since 2018, Peroni said. However, all think tanks have their own viewpoints, with the nonprofit leaning liberal, Peroni added.

For its data, the nonprofit relied on IRS income tax data, the U.S. Bureau of Labor Statistics' Consumer Expenditure Survey, sales tax data and property tax data from sources like the Census Bureau, Davis said.

Despite Texas' reputation as a "low-tax, low-government state," Peroni said most of its residents are high-taxed. States with income taxes do more to lower inequality, according to Peroni.

MORE: Texas teachers collectively pay more than any other state in school supplies

"We don't have that; we've never had it, as far as I know," Peroni said of a state income tax. "That makes it very hard to solve this inequality problem. When they say Texas is a very regressive state, it means if you're low income, you spend 100 percent of it, you spend it. Some of it is tax-exempt, but most of that spending is taxed by sales tax."

Peroni said there doesn't seem to be a politician or political party in the state willing to propose a state income tax.

"State income tax seems to be a third rail politically in Texas and is rarely proposed even by the most liberal politicians," Peroni said. "It makes it very hard to change the structure."

[email protected]