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Texas Income Tax

Decent Essays

The state of Texas should not adopt a personal income tax. Any legislator who would propose a bill seeking to establish a state income tax would be seriously questioned, because a state income tax is currently unconstitutional.
The Texas Constitution was amended in 1993, during Governor William P. Clements’ second administration, to prohibit a state income tax. Therefore, any such proposal would have serious difficulties passing both chambers of the legislature and then it would be subject to ratification through a statewide referendum. Texas’ lack of a state income tax seems to have enhanced its economy vitality with this approach. It also lacks a corporate income tax, which is not prohibited by the Constitution. Texas is one of seven …show more content…

This was also claimed as a benefit of the Texas Lottery and look what happened to that? It is all well and good to say something will work but until it is in place, would one not know for sure. Unfortunately, the cost of implementing such a personal tax would blow the benefits right out of the water. It would be not be cost effective to propose such a tax, since the start up costs would be prohibitive. Both counties and cities receive huge revenues in their collection of sales tax. To consider cutting that back would be …show more content…

This could cut the local tax rate – in most school districts now around $1.50 per $100 of property value for maintenance and operations (M&O) – to roughly 50 cents! The maximum M&O tax rate – also now generally capped at $1.50 – must be reduced by the same percentage as total M&O taxes. If the income tax cut the property tax rate by 65%, then it would also cut the tax cap by 65%. After the cap was cut, only the voters in a school district could increase their district’s maximum tax rate. The Bullock Amendment then provides that the remaining one-third of income tax revenue could be spent, but only on education. State income tax payments are deductible from taxable income in calculating federal income taxes. Deductibility shifts part of the cost of public education to the federal government. The above chart shows that, although the tax would have raised $16.4 billion in 2004, the net cost to Texas taxpayers would have been only $3.9 billion. Lower property taxes would have returned most of the new revenue ($10.9 billion) to taxpayers. Uncle Sam would have picked up 10% of the total cost of the income tax ($1.6 billion) through higher deductions on federal tax

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