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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

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. 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.

mbesto 4y ago
> 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. Is it? My understanding is that they calculate the absolute value and then reverse it back into a % of their income (also known as effective tax rate, but in this case your effective tax rate for ALL taxes, not just income tax). The way I understand the data is along the following simplified example: A person who makes $100k in CA with a 10% income tax, and a $1M valued home @ 1% tax, pays $20k in taxes each year, which is 20% of their income. A person who makes $100k in TX with a 0% income tax, and a $1M valued home @ 2.2% tax, pays $22k in taxes each year, which is 22% of their income. Texas is a regressive system because it taxes an individuals total take-home income harder even, and especially, when their wealth (most people's wealth is tied to home value) goes up. The whole state of Texas, even outside of cities, is seeing property values go up. EDIT: Fixed my math. Posted that way too quick. EDIT2: While my example illustrates the danger in property values outpacing wages, the crux of the current issue is largely due to excise taxes: https://itep.org/whopays/texas/ https://itep.org/whopays/texas/ Basically you pay an extra 6% "on all retail sales, leases and rentals of most goods, as well as taxable services" in the state of Texas: https://comptroller.texas.gov/taxes/sales//#:~:text=Texas%20imposes%20a%206.25%20percent%20state%20sales%20and,for%20a%20maximum%20combined%20rate%20of%208.25%20percent https://comptroller.texas.gov/taxes/sales//#:~:text=Texas%20....
- umeshunni 4y ago
  > A person who makes $50k in CA with a 10% income tax, and a $1M valued home @ 1% tax, pays $20k in taxes each year, which is 20% of their income. A person in CA a 50k income will not pay a 10% income tax OR usually own a $1M valued home.
- filmgirlcw 4y ago
  You mean a person who makes $100k a year, right? (Trying to make $20k 20% of $50k and failing)
- xienze 4y ago
  > $100K income, $1M house Methinks you may have picked these numbers to tilt things in favor of CA. If the income were _slightly_ more in line with what might be considered “reasonable” for a $1M house, like say $250K, suddenly the math makes much more sense in Texas. And this doesn’t even get into the whole “house that costs $1M in CA wouldn’t cost $1M in Texas” thing...
  - mbesto 4y ago
    The point was to illustrate that a rise in home prices with stagnating wages, means the effective tax rate for an individual will only get worse under Texas's system, hence, regressive. Whether it's at that tipping point right now, I don't believe thats the case when comparing like-for-like income+property as you rightfully point out. As I understand the source data it also introduces sales/excise taxes which does make it tip over. With more and more people moving to Texas, it's not unrealistic to see more $1M homes.
  - vineyardmike 4y ago
    > And this doesn’t even get into the whole “house that costs $1M in CA wouldn’t cost $1M in Texas” thing... People tend to buy the most house they can afford, not just the most house they need. If you have 1M for a house, you buy a 1M house in Cali or TX. Most wouldn’t move to TX and buy something cheaper, but instead something bigger.
JeremyNT 4y ago
I don't think this is accurate. The "no income tax, high sales tax" tax structure in TN/FL/TX/etc is intended to make sure poor people are paying high tax rates even when they aren't making much money. Thus somebody who makes less (and is forced to spend most of their money buying basic "things" needed to get by) will spend a higher percentage of their overall earnings on taxes than in states with lower sales tax. In regressive tax states, tax revenue "per capita" may be lower (because you're leaving a lot of money on the table - you're letting the rich take home more) and you've de-facto shifted the tax burden to people who have less money to begin with. So a large percentage of the population ends up paying more in taxes - the people who make less and use most of their income for purchases - while the high income earners pay less. You simultaneously reduce the money available for government programs while penalizing the people who need those programs more. Note: people on HN are likely to be the "high income" earners who benefit from such a tax regime. If you're looking to work remotely and are optimizing to this level - i.e., you are seeking out regressive tax regions so you can pocket more money - you might want to consider whether this is a moral choice you actually feel comfortable with.
- tristor 4y ago
  If your point (and the article's point) is that sales taxes are regressive and that moving from California where Prop 13 locks your property tax rate to a new state with high property taxes is effectively regressive, I guess... okay. That's not really news to anyone or surprising. If you were not in California or Texas, but had to pick one to move to, you'd be better off moving to Texas at any income level at or above the federal median income. While the property tax rates are lower in California and can be locked in with Prop 13, the house prices are massively higher. You can buy a nice home in Texas for $250k in most of the state (not in Austin), and that same house in California would be minimum $1M. A smaller percentage of a significantly higher valuation is still a boatload of money. Also, you are making a bunch of conclusions not in evidence. The evidence, at least for Texas, shows that the majority of tax revenue comes from high income earners, primarily because they're land owners who buy more expensive/larger properties and because they make larger purchases. The state gets its income from property tax and sales tax primarily, both of which are considered "regressive taxes". While you're correct that these taxes account for a larger percentage of income for someone with lower income, the net effect is that the majority of the tax burden is being paid by more wealthy residents. Generally the right thing to do for people in lower income brackets in states without income tax is to increase their income, since they aren't penalized for it. In other states, you get penalized for increasing income, and in many cases are completely out of reach of ever having property ownership. Average people own homes in Texas, average people in California rent forever. Ultimately, I suppose it's a good thing for these sorts of analysis to occur because it's more information to consider, but I do think there's some insidiousness to the way this is framed both in the article and in many of the comments. I don't even live in Texas anymore, but I definitely don't want to see it Californiated. If you want to live in California and think it's a better deal, go live in California, don't demand that Texas matches the same tax regime.

mbesto 4y ago

> 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. Is it? My understanding is that they calculate the absolute value and then reverse it back into a % of their income (also known as effective tax rate, but in this case your effective tax rate for ALL taxes, not just income tax). The way I understand the data is along the following simplified example: A person who makes $100k in CA with a 10% income tax, and a $1M valued home @ 1% tax, pays $20k in taxes each year, which is 20% of their income. A person who makes $100k in TX with a 0% income tax, and a $1M valued home @ 2.2% tax, pays $22k in taxes each year, which is 22% of their income. Texas is a regressive system because it taxes an individuals total take-home income harder even, and especially, when their wealth (most people's wealth is tied to home value) goes up. The whole state of Texas, even outside of cities, is seeing property values go up. EDIT: Fixed my math. Posted that way too quick. EDIT2: While my example illustrates the danger in property values outpacing wages, the crux of the current issue is largely due to excise taxes: https://itep.org/whopays/texas/ https://itep.org/whopays/texas/ Basically you pay an extra 6% "on all retail sales, leases and rentals of most goods, as well as taxable services" in the state of Texas: https://comptroller.texas.gov/taxes/sales//#:~:text=Texas%20imposes%20a%206.25%20percent%20state%20sales%20and,for%20a%20maximum%20combined%20rate%20of%208.25%20percent https://comptroller.texas.gov/taxes/sales//#:~:text=Texas%20....

umeshunni 4y ago
> A person who makes $50k in CA with a 10% income tax, and a $1M valued home @ 1% tax, pays $20k in taxes each year, which is 20% of their income. A person in CA a 50k income will not pay a 10% income tax OR usually own a $1M valued home.
filmgirlcw 4y ago
You mean a person who makes $100k a year, right? (Trying to make $20k 20% of $50k and failing)
xienze 4y ago
> $100K income, $1M house Methinks you may have picked these numbers to tilt things in favor of CA. If the income were _slightly_ more in line with what might be considered “reasonable” for a $1M house, like say $250K, suddenly the math makes much more sense in Texas. And this doesn’t even get into the whole “house that costs $1M in CA wouldn’t cost $1M in Texas” thing...
- mbesto 4y ago
  The point was to illustrate that a rise in home prices with stagnating wages, means the effective tax rate for an individual will only get worse under Texas's system, hence, regressive. Whether it's at that tipping point right now, I don't believe thats the case when comparing like-for-like income+property as you rightfully point out. As I understand the source data it also introduces sales/excise taxes which does make it tip over. With more and more people moving to Texas, it's not unrealistic to see more $1M homes.
- vineyardmike 4y ago
  > And this doesn’t even get into the whole “house that costs $1M in CA wouldn’t cost $1M in Texas” thing... People tend to buy the most house they can afford, not just the most house they need. If you have 1M for a house, you buy a 1M house in Cali or TX. Most wouldn’t move to TX and buy something cheaper, but instead something bigger.

JeremyNT 4y ago

I don't think this is accurate. The "no income tax, high sales tax" tax structure in TN/FL/TX/etc is intended to make sure poor people are paying high tax rates even when they aren't making much money. Thus somebody who makes less (and is forced to spend most of their money buying basic "things" needed to get by) will spend a higher percentage of their overall earnings on taxes than in states with lower sales tax. In regressive tax states, tax revenue "per capita" may be lower (because you're leaving a lot of money on the table - you're letting the rich take home more) and you've de-facto shifted the tax burden to people who have less money to begin with. So a large percentage of the population ends up paying more in taxes - the people who make less and use most of their income for purchases - while the high income earners pay less. You simultaneously reduce the money available for government programs while penalizing the people who need those programs more. Note: people on HN are likely to be the "high income" earners who benefit from such a tax regime. If you're looking to work remotely and are optimizing to this level - i.e., you are seeking out regressive tax regions so you can pocket more money - you might want to consider whether this is a moral choice you actually feel comfortable with.

tristor 4y ago
If your point (and the article's point) is that sales taxes are regressive and that moving from California where Prop 13 locks your property tax rate to a new state with high property taxes is effectively regressive, I guess... okay. That's not really news to anyone or surprising. If you were not in California or Texas, but had to pick one to move to, you'd be better off moving to Texas at any income level at or above the federal median income. While the property tax rates are lower in California and can be locked in with Prop 13, the house prices are massively higher. You can buy a nice home in Texas for $250k in most of the state (not in Austin), and that same house in California would be minimum $1M. A smaller percentage of a significantly higher valuation is still a boatload of money. Also, you are making a bunch of conclusions not in evidence. The evidence, at least for Texas, shows that the majority of tax revenue comes from high income earners, primarily because they're land owners who buy more expensive/larger properties and because they make larger purchases. The state gets its income from property tax and sales tax primarily, both of which are considered "regressive taxes". While you're correct that these taxes account for a larger percentage of income for someone with lower income, the net effect is that the majority of the tax burden is being paid by more wealthy residents. Generally the right thing to do for people in lower income brackets in states without income tax is to increase their income, since they aren't penalized for it. In other states, you get penalized for increasing income, and in many cases are completely out of reach of ever having property ownership. Average people own homes in Texas, average people in California rent forever. Ultimately, I suppose it's a good thing for these sorts of analysis to occur because it's more information to consider, but I do think there's some insidiousness to the way this is framed both in the article and in many of the comments. I don't even live in Texas anymore, but I definitely don't want to see it Californiated. If you want to live in California and think it's a better deal, go live in California, don't demand that Texas matches the same tax regime.