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Texas has never been lacking in self-confidence, especially when it comes to touting the tax advantages it has over other states. Well, not so fast, Lone Star Staters – you might be paying higher taxes than even Californians.
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As the Houston Chronicle reported, a graph shared on Reddit’s main business forum illustrated how the vast majority of Texans pay more taxes than Californians. This is the case even though Texas does not levy personal income tax (and California does).
The chart contained 2018 data from the non-profit Institute for Taxation and Economic Policy (ITEP), which collected statistics from a variety of sources: IRS income taxes, sales taxes, property taxes and the US Bureau of Labor Statistics Consumer Expenditure Survey.
According to ITEP research, Texans earning in the bottom 20% of incomes — those earning less than $20,900 a year — pay about 13% of their income in state and local taxes. By comparison, Californians in the bottom 20% (who earn less than $23,200 a year) pay a rate of 10.5%.
Nor is it the only income group where taxes are higher in Texas than in California: the 20% of earners in Texas (who earn between $35,800 and $56,000 a year) pay 9.7% state and local taxes. Meanwhile, it’s 8.9% for middle earners. employees in California, whose salary ranges from $39,100 to $62,300 per year.
The only Texans who are doing better than Californians are the rich. The top 1% in Texas — those earning $617,900 or more a year — pay just 3.1% of their income in local and state taxes. That compares to a rate of 12.4% for high earners in California, who earn $714,400 or more per year.
Although the ITEP data is from four years ago, taxes in Texas are about the same as they were then, according to Robert Peroni, professor of taxation at the University of Texas at the faculty by law of Austin.
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As noted by the Chronicle, ITEP ranked Texas as the second most regressive tax state behind Washington. This is because low-income taxpayers pay a disproportionate share of the tax burden. California is ranked as the most progressive tax state because its high-income residents tend to pay higher tax rates.
“When they say Texas is a very regressive state, that means if you have low income, you spend 100% of it,” Peroni told the Chronicle. “Some of it is tax-exempt, but most of those expenses are taxed by sales tax.”
Unsurprisingly, Californians had a blast with the Reddit post — including Long Beach Mayor Robert Garcia, who tweeted, “Hey Texans, come to California to pay less tax. And we have wonderful weather.
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