The Radical Center
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The Radical Center

Taxes in Texas Among the Worst, not the Best

Libertarians can tell the truth, the whole truth and nothing but the truth and still have been better off saying nothing. By this I mean how you say something is often more important than what you say. And you can give the wrong impression, one that buys into the worst stereotypes about libertarians.

Consider a recent piece I read which I think is factual but says the wrong thing about libertarians — not intentionally I should add.

It discussed a rather wealthy sports figure earning in the millions. It compared how this earner of $17m per year would pay a larger tax in California than in Texas. No disputing that, but how is talking about tax rates for multimillionaires exactly going to resonate with the average taxpayer?

In addition, contrary to the view of libertarians, the typical one is not a multi-millionaire. I know a hell of lot more who are university professors and over the last 40+ years met just a handful of the ultra-rich.

This observation is particularly true when you look at those workers in the bottom 20% economically and discover Texas stiffs them while California’s rates are lower. Texans who are in lowest 20% of income earners — less than $20,900 a year — pay about 13% in state and local taxes. Californians in the bottom 20% (who earn less than $23,200 annually) pay a rate of 10.5%.

The Houston Chronicle noted “the vast majority of Texans pay more in taxes than Californians do. That’s the case even though Texas does not levy a state income tax on individuals (and California does).” The libertarian piece looked only at income taxes ignoring all the other taxes Texans pay, which exceed those imposed by California — just not if you’re a millionaire. All Texas did was shuffle taxes around without lowering the burden at all—they just put it on the backs of the average taxpayer instead.

Texas tax law is written to favor the very rich who control the state legislature at the expense of everyone who isn’t very rich.

Conservative Republican Sen. Kel Seliger — who retired from the legislature in Texas recently — said two billionaires basically own the Republican Party in Texas and they determine policies. Seliger called it “a Russian-style oligarchy, pure and simple.”

The banking site reporting on this disparity between the average person and the ultra-rich warns it’s not just the lowest income Texans who get screwed either.

The middle 20% of earners in Texas — making $35,800 to $56,000 a year — pay 9.7% in state and local taxes .Meanwhile, it’s 8.9% for middle income earners in Californian, whose pay ranges from $39,100 to $62,300 a year.

They note that ONLY one group pays lower taxes in Texas than in California —the very wealthy:

The top 1% of earners in Texas — those making $617,900 or more annually — only pay 3.1% of their income in state and local taxes. That compares to a rate of 12.4% for top earners in California, who make $714,400 or more per year.

This doesn’t include the massive subsidies given to parasites such as Elon Musk. The Houston Chronicle “ranked Texas as the second-most regressive tax state behind Washington. That’s because low-income taxpayers pay a disproportionate share of the tax burden. California ranked as the most progressive tax state because its higher-income residents tend to pay higher tax rates.” Visual Capitalist reported: “California has the most equitable taxes” while warning, “Texas and Florida have the 2nd and 3rd most inequitable taxes and the middle 60% pay effective rates that are about 3x higher than the top 1%.”

Visual Capitalist says the “low tax” reputation of places such as Texas are NOT justified by actual tax rates. That note the nine states with no income taxes have “reputations as ‘low tax’ states — but this is true only for high-income families. In order to make up for the lost revenue, states rely more heavily on tax sources that disproportionately affect the lowest earners.” In other words to make up for the lower taxes on the wealthy these “low tax” states double down on the average taxpayer making life harder for them.

It’s Not Just Income Taxes Either

SmartAsset reports the effective property tax rate in California is 0.71% and 0.99% in the country on average, compared to Texas where it is 1.60% — well above the national average. It’s worse in some places, Travis County, TX has an effective average rate of 1.95%. Harris County, TX is 2.130%, in El Paso County, TX it’s 2.58%. Meanwhile in “high taxes” San Francisco it’s 0.74%, while Los Angeles is 0.82%.

Rocket Mortgage keeps track of property taxes for their customers and they report the “average” priced California home of $505,000 pays $1,644 per annum in property taxes. (I should note the California home where I live was purchased for $94,000.) Meanwhile the average $215,300 home in Florida is taxed at $1,934 per annum while an average $172,500 home in Texas pays a whopping $3,907. (It should be noted that the average per capita personal income in California is $76,614, while just $59,865 in Texas.)

Yes, the ultra wealthy will pay fewer taxes in Texas, but then they own the legislature, while the average Texan pays more than the ultra wealthy. Sure, you want to get your message to the Top 1%, but you’ll go much further getting your point across to the Average Joe who is not favorably situated in Texas. Reporting part of the picture, while true, falls short of what needs to be done.

Given how Texas has an ultra regressive tax system impacting everyone except the wealthiest few why make it sound as some example of libertarian tax policy? It should also be pointed out that libertarian policy institutes long ago promoted a flat-tax revolution. With that in mind look back at the chart above and you’ll see California has a relatively flat rate—10.5% in the lowest income groups vs. 12.4% in the highest— while Texas has the least flat tax—13% for the lowest income groups but only 3.1% for the top 1%.


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A blog for the Moorfield Storey Institute: a liberaltarian think tank.

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James Peron

James Peron is the president of the Moorfield Storey Institute, was the founding editor of Esteem a LGBT publication in South Africa under apartheid.