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While other states contributes to the taxation of the country, on the other hand Texas will never have a personal income tax in the future because Texas deals in sales and excise taxes which sometimes become much higher than the personal income tax comparatively. According to the Texas constitution, the citizens are tax-free from any sort of personal income tax. Recently passed by Bullock. A proposed constitutional amendment that effectively gave the electorate a veto over any proposal for an income tax.
If even the state decides to impose the personal taxation policies in the future, they have to seek statewide votes from the public. Also, two-thirds of the Texas House and Senate must agree to repeal. The tax is used for the public development such as for public education and infrastructure. Once the tax amendment bill gets passed and approved, the whole Texas’s population has to oblige by the law.
How a state with no proper taxation system and funding would run?
Texas does not rely on personal income tax of the public but rather rely on other significant revenue sources such as property and sales tax. These taxes are sufficient for the state to fulfill the schools and health care funding.
Texas sources of revenue
Texas department of Comptroller of Public Accounts manages state’s revenue and tax collections. There are about 60 different categorical taxes and assessment collections. The state collects about 57% of the tax from sales tax. 6.25% of sales tax is the regular tax on regular retails. According to the agency data for the fiscal year of 2019, the $127.9 billions collected revenue comprised of $34 billion of sales tax. 19.8% revenue comprised of sales from transactions of oil, motor vehicles, and natural gas production. It received $41.9 billion in terms of federal funding to accommodate the cost for public expenses such as medical, transportation, and education. In short, property taxes are large enough to carry out all public services.
Reasons behind no personal income tax for Texans
Besides having more than 28 million of population. Even greater than New York, Texas government don’t spend much on their people as compared to the New York holders. These few reasons embark why US government have slightly soft hand on Texans regarding taxation.
- Texas has highest number of illegal and legal immigrants. The population alongside with the domestic issues accumulate due to this.
- Unemployment rate comparatively higher than other sister states. It was recorded in 2019, the Texas has unemployment rate of about 20% to 21% which is far greater than the New York.
How Texas manages its revenue?
Texas due to the lack of income and personal taxes spent much lesser in public infrastructure comparatively to New York and Florida. Therefore, the government has a very strict policy in budget spending. Texas manages it revenue by receiving hefty amount of sales tax. About 7 percent sales tax go into the pockets of government. Although, it ain’t the highest one, but quiet higher if we consider the budget of Texas. Departments from where Texas get huge chunk of Taxes
- Motor Vehicle
- Property Tax
- Education Taxes
Motor vehicle tax in Texas marks the highest in the entire United States.
Texas will never have a personal income tax in the future because of the huge number immigrants from across the Mexico, Europe and Asia. But we might see in future some changes in the constitutions as the economy of US is fluctuating due to the rigorous Chinese attempts to bypass US products.