Texas is one of the states that do not have an income tax for people working and residing within its borders. While this decision is viewed as an incentive in some quarters for people to save more money and grow, critics argue that the decision has overburdened local governments and caused inadequate financing of important sectors.
The lack of income tax is viewed by proponents as an incentive for people to save more money. According to Lucci (2019), Texas decision to abolish income tax is supposed to portray it as a pro-growth tax code state. Texas ranks top among states with the most competitive tax codes, and that lessens the burden of taxation among people. No income tax is supposed to encourage people to move and live in Texas with the hope that they may have more money to spend in the state and thus grow the state’s economy.
Delegate your assignment to our experts and they will do the rest.
Conversely, the lack of an income tax creates problems in the sense that the local government is overburdened and there are inadequate finances to fund important projects such as education and social amenities. Batheja (2013) states that Texas has in turn increased taxation on property and sales, which creates a disincentive to businesses and investors. Many of these businesses may shut down, and as a result adversely affect the state’s economy.
To conclude, Texas decision to ban income tax focuses mainly on the people and not the functioning of the economy and important sectors such as schools and infrastructure. It seems the lawmakers’ objective was to please the people by abolishing income tax. However, they did not see the far-reaching effects. If investors move to other states with less property and sales taxes, people in Texas will lose their jobs and the state’s economy will be adversely affected. Therefore, it is best to have an income tax and low sales and property taxes to stabilize the economy of the state.
References
Batheja, A. (2013, May 24). The joys of no income tax, the agonies of other kinds. The New York Times . https://www.nytimes.com/2013/05/24/us/in-texas-the-joys-of-no-income-tax-the-agonies-of-the-other-kinds.html
Lucci, M. (2019, May 22). Texas legislature approves constitutional amendment to prohibit individual income taxation. Tax Foundation . https://taxfoundation.org/texas-income-tax-constitutional-amendment/
