COLLEGE STATION — This time of year usually brings about fond memories of family…and not so fond memories of taxes due. However, if there is one thing to be thankful for, it is that Texans enjoy one of the lowest tax rates in the United States.
If you compare per capita (how much tax the average person is paying) or the average tax per thousand dollars of income, Texans ranks about 35th in the nation, said Dr. Judith Stallmann, economic development specialist with the Texas Agricultural Extension Service. “So that makes it a fairly low tax state overall,” Stallmann added.
The ranking is based on the amount of money each person pays to the state in terms of sales, property and other types of taxes. However, in the sales tax category, Texas’ tax is comparatively high. It is six and a quarter cents on the dollar. Local governments can add another two cents to that.
“When you take it up to eight and a quarter because of some of the local options, that’s getting up there pretty high,” Stallmann said.
Stallmann is one of the authors of a new Extension bulletin that chronicles taxation in Texas and explains how the different taxes work. It addresses the fairness and effect of taxes on people of different incomes.
Also, it addresses whether a tax provides adequate revenue or if it has to be constantly readjusted to get the revenue that’s needed for the basics of government.
The bulletin addresses how easy a tax is to administer. For instance, the corporate franchise tax is complicated.
“It’s either a tax on net worth or it’s a tax on what is called earned surplus which is basically profits and the salaries of executives. Businesses have to calculate that tax both ways and then they have to pay the higher of the two,” she explained.
That is one tax Stallmann expects the legislature to consider revising. Currently, the state is holding hearings to evaluate Texas’ tax laws.
Stallmann also expects Texans to pay more in fees and licenses. There is a nationwide trend toward increased fees and licenses.
“An example of a fee or license that we’re all familiar with is our driver’s license, but there’s hunting licenses as well,” she said.
College tuition is an example of a fee.
“We’re beginning to rely more upon those as sources of revenues to run some specific services that the state provides,” she said.
You can get a copy of Stallmann’s bulletin, “Texas Taxes: A Fact Book,” through the Extension Service or by logging onto Stallmann’s homepage on the Texas A&M University Department of Agricultural Economics web site or by logging onto the Agricultural Communications web site.
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