(1)
Taxes are a necessary part of living in and maintaining a modern, efficient society. However, there is a reason people have been flocking to Texas over the last decade. The common argument against a state income tax usually infers that “states that don’t dip directly into their residents’ pay become beacons for growth. They’re better at creating jobs and keeping a core of young, educated workers from moving to other states” (Garcia, 2019). Not only does this prevent others from leaving the state, it is clear that it also leads to mass migration into these states. In fact, the American Legislative Exchange Council reported that “over the past decade the nine states without a personal income tax have consistently outperformed – on GDP growth, employment growth and in-state migration – the nine states with the highest taxes on personal income” (Garcia, 2019). Some economists disagree and argue that government spending has more ability to boost economic growth. It seems that this debate is becoming more and more ideological. Emotions are high when this discussion reaches the topic of poverty. “It’s extremely difficult to fund government adequately and sustainably when families with the largest incomes are contributing the least,” says Carl Davis, research director at the Institute on Taxation and Economic Policy (Garcia, 2019). This tends to happen in states with little income tax and a far higher sales tax. States with no income taxes tend to have a much higher sales tax than others. Thus, there are trade-offs to almost every economic policy in place. Another argument in favor of no income tax is that when people have less disposable income, consumer spending tends to decline (Hamel, 2019). This has been known to reduce the number of sales that businesses make. If businesses have slow sales, they might be forced to lay off workers or close altogether. In conclusion, there is little promise that no income tax will bring economic prosperity to all in a given state. However, the positive economic implications still seem to trump the negative trade-offs. Local governments in this state should experiment with an income tax to see how it will affect certain districts before implementing an income tax state-wide.
(2)
Texas is one of seven states without a personal income tax. Texas depends on other taxes, such as sales and property taxes to fund public services such as school and healthcare. In theory, since they receive funding from other taxes, they should not have to have a state income tax. The question becomes: is the current system efficient in funding public services such as education.
Texas ranked 39th among all states in total education spending per student during the 2017-2018 school year, according to the latest National Education Association report (https://www.dallasnews.com/news/politics/2020/01/09/with-no-state-income-tax-where-does-texas-get-its-money-curious-texas-investigates/ (Links to an external site.)). It is important to acknowledge that these numbers may be the result of not having enough funding in general, or the state not prioritizing education altogether.
Texas ranks 37th in Healthcare in comparison to the other states, and 34th in education ( https://www.usnews.com/news/best-states/texas (Links to an external site.)). Texas should only begin to have a state income tax if these numbers are the result of not having enough funding. The problem may also lie in the prioritization of funding. For example, Texas ranks 40th in Natural Environment, and majority republican states show this trend. Nonetheless, the situation is a bit complex because one has to consider the idea of not having enough funding versus funding allocations based on personal biases in policy making.
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