A tax is a mandatory finance charge imposed on a taxpayer or rather "money that the government collects within its borders to pay for everything that the government does" (Weigant, 2011). Therefore, each state should have a type of taxation that they see is beneficial to both its citizen and the government.
Texas taxation system is based purely on sales and property tax. This form of taxation has seen the population of Texas grow tremendously. Governor Bobby Jindal of Louisiana said many people are relocating to Texas because of the jobs available and the no-income-tax law. He used Texas as both the problem and the solution. But Texas is facing a challenge. The ever-increasing population has caused an increase in local debt as the money earned is used for public maintenance projects rather than the development of new projects (Batheja, 2013). Bennet Sandlin said that Texas is using more of its money funding cities and counties instead of building roads and highways. In short, the form of taxation currently in place is no longer beneficial.
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The progressive tax, on the other hand, is a tax based on the income of a person; those who earn more pay higher taxes; Income is the money a person makes. Income tax can generate a sustainable source of revenue that keeps up with the cost of providing services (ITEAP, 2012). Because as the salaries of the poor increase, their income tax also rises. Additionally, income tax will lead to a higher economic growth rate as more money will be available to increase infrastructure that encourages businesses. Texas property tax and sale tax are higher than most of the other states, a burden to the middle and low-income groups with an elevated portion of total taxes. For Texas to curb this, it should introduce income tax and reduce rates for property and sale tax.
The proportional tax would cause a reduction in revenue amount. High earners will enjoy a tax cut when compared to the amount they will pay when income tax is implemented. The low and medium earners will see an increase in the amount of tax they pay. I.e., someone who has a current income of $50,000 pays an income tax of 16%, increasing it to a flat rate of 20% will affect them profoundly. Again, this will be a burden to them because they need every single penny to help them be able to support their families.
Although the sales and property tax system are bringing in more companies to Texas, the high population of people associated with these firms is becoming difficult to manage. More infrastructure is needed to support the citizen’s demands. Therefore, with the advantages of income tax listed above, I see it fit for Texas to implement the progressive tax to be able to develop the state.
References
Batheja, A. (2013). The Joys of No Income Tax, the Agonies of other Kinds: The New York Times. Retrieved from http://www.nytimes.com/2013/05/24/us/in-texas-the-joys-of-no- income-tax-the-agonies-of-the-other-kinds.html
Weigant, C. (2011). A beginner’s guide to America’s Tax: Business Insider. Retrieved from http://www.businessinsider.com/a-beginners-guide-to-americas-tax-system-2011-4?IR=T
The Progressive Income Tax: An Essential Element of Fair and Sustainable State Tax Systems [PDF FILE]. Retrieved from http://www.itep.org
