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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 i
by 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 agoYou 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 agoThe 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.