- Pexels / Acharaporn Kamornboonyarush
But that doesn't mean our residents are immune from taxation. What the Lone Star State and its municipalities don't collect through an income tax, they raise elsewhere — namely through sales and property taxes.
Indeed, Texas has the 11th-highest tax rate in the country, according to a new study by financial site WalletHub. That largely comes down to residents here paying the 6th-highest in real estate taxes in the U.S. and 3rd-highest sales and excise taxes.
According to WalletHub's analysis, a Texas household earning the median U.S. income pays an effective 12.71% tax rate. That compares to just 5.73%, 6.19% and 7.08% in the three states with the lowest taxes — Alaska, Delaware and Montana, respectively.
Even California, which Texas politicos love to rail against as the epitome of tax-and-spend liberalism, has a lower effective tax rate — just 8.94%.
Making matters worse for average Texans, real estate and sales taxes are regressive taxes, meaning they tend to hit low- and middle-income residents the hardest. In that regard, the new findings seem to piggyback onto a 2019 WalletHub study that ranked Texas the 8th-worst state for tax burdens on low-income households.
"More specifically, low income earners in Texas are among the most burdened by taxes, as more than 11% of their income goes towards paying them," WalletHub analyst Jill Gonzalez told the Current in an emailed statement. "The situation is similar for middle income earners, who spend 9.8% of their income on real estate and sales taxes. By comparison, taxes make up only about 7% of the revenue of high-income earners."
Gosh, maybe that constitutional amendment wasn't such a great ideal after all. Cue the sad trombone.
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