Because Texas does not have a state income tax, a Reddit user asked last Saturday on the social media platform how Texas will pay for governmental services if taxes are slashed. The post has garnered more than 1,000 upvotes (akin to likes) since being posted over the weekend and almost 700 comments.
“So if Republicans don’t want an income tax, and Abbott is vowing to cut property taxes, where does the money come from,” the user, TAG_Enigma, wrote. “Explain like I’m five” (a common phrase on Reddit asking to explain simply).
“Abbott and GOP on the county and city level have had YEARS to do something about property taxes that have continued to rise on their watch. It’s just a BS election promise,” one user, dust-ranger, wrote in response.
Others said governments would have to get creative with their funding.
“Cities take out more public debt (interest), privatize services, and cut programs,” another user, already-redacted, commented. “The state cuts programs.”
If Abbott and the Texas Legislature were to make good on that proposal, there may need to be a “massive increase” in sales taxes, the Fort Worth Star-Telegram reported in 2021, when Republican gubernatorial candidate Don Huffines proposed eliminating property tax cuts in a primary challenge to Abbott.
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The current sales tax rate in Texas is 8.25 percent, the legal maximum in the state.
Schools take up the largest portion of a property owner’s bill. In recent years, however, the state has provided a slightly larger share of its funding to school districts, per the Star-Telegram.
Additionally, counties almost entirely rely on property taxes as well. In 2019, local Texas governments collected more than $62 billion in property taxes.
That funding would have to be replaced by sales taxes because Texas does not have a state income tax, which is considered a third rail in Texas politics, University of Texas at Austin School of Law professor Robert Peroni told the Express-News in August. It’s a rare proposal even among the most liberal politicians, Peroni said then.
Texas is already one of the most regressive states in terms of taxes, meaning it contributes at a higher rate to income inequality through its tax structure, Peroni said. Texas taxes are currently skewed toward those with higher incomes, Peroni said, and there is no counterbalance in the state that would even the scales.
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“If you’re low-income, you spend 100 percent of it,” Peroni said. “Some of it is tax-exempt, but most of that spending is taxed by sales tax.”
Increasing sales tax in the state would only contribute to lower-income residents facing a larger, more disproportionate share of the tax burden, Peroni said in August.
shepard.price@express-news.net | @shepardgprice
