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New Report Shows Texas Tax System Skewed

PHOTO: According to a new report, in order for Texas to meet infrastructure needs and make sure schools and parks stay open, costs needs to be shared more fairly among taxpayers. Photo credit: Leaflet/Wikimedia commons.
PHOTO: According to a new report, in order for Texas to meet infrastructure needs and make sure schools and parks stay open, costs needs to be shared more fairly among taxpayers. Photo credit: Leaflet/Wikimedia commons.
April 15, 2015

AUSTIN, Texas - In order for Texas to meet its infrastructure and public works obligations -- making sure bridges don't collapse and schools and parks are open for business -- costs need to be shared fairly among taxpayers, according to a new report from the Center for Public Policy Priorities.

Brakeyshia Samms, the report's author and state policy fellow, said the state's current tax system misses the mark.

"So what this report means is that Texas households that are least able to afford it pay the most in taxes as a percentage of their income," she said, "while the Texas households that can afford to pay more pay the least."

The report broke Texas households into five income-level groups. In a fair tax system, Samms said, taxes paid by each group would match the group's percentage of income. The report found that Texas taxes are regressive, and that households earning less than $34,000 a year pay a percentage almost four times higher than households earning more than $147,000 a year.

Texas has the third most regressive state and local tax system in the nation, according to the report. The tax on oil production got the best grades for fairness, with property taxes, insurance premiums and sales taxes faring much worse.

Samms concluded that in order for the state to have the resources to pay for critical services in future years, top earners will need to contribute a percentage of their incomes at least as much as low-income families.

"That way, the state can invest in things like schools, public health, safety, roads, libraries and parks," she said, "services that I used growing up and continue to use today that I know Texans all across the state can use."

Sales tax, which accounts for more than half of all state tax revenue, hits low-income families hardest. The report found that poor families spend three-quarters of their income on goods subject to sales tax, while the state's highest earners spend less than one-quarter of their income on the same items.

The report is online at forabettertexas.org.

Eric Galatas, Public News Service - TX