Texas is a low-cost tax-free state
Texas is considered to have a very regressive tax system. Facts by the institute of taxation and economy state that it has the third most unjust taxation system. This when compared to the entire company.
Let’s put this theory into perspective. This unfair tax system makes the people who earn a lesser amount in Texas have to pay a greater amount than those who earn and can easily pay more.
As a matter of fact, ITEP reports that the community considered as “poor” in texas has to pay 4 times greater amount as percent on their income. On the other hand, the middle-class category pays thrice as much as the wealthier set of the population in Texas.
This system overburdens the low-income generating population. Texas is established as an income-free (tax) state of the country. Individuals of Texas are thus, free from paying personal income tax.
The tax system in Texas
Texas is the only state which has its people free from filing personal income tax. Not only this, but the state of Texas also does not collect property taxes from its citizens. However, this must be taken into account that the counties, cities, districts collect property tax on their own.
Few types of Tax Collection in Texas
1. Capital Gains Tax
It’s a tax imposed on the profit earned from the selling of a capital asset. Anything can be classified as a capital asset. For example, business, land, stocks, etc.
This type of tax can be levied on Federal or state levels. The only difference between the two is, at the federal level, the tax rate is lower than personal income. Whereas, the state mostly tax capital gains on the same amount as income.
2. Sales Tax
Sales tax is the most common type imposed on the people. Every country, every state has a different amount of percentage according to which they surcharge.
Since the earliest of times, the state has always relied on sales tax for most of its fund generation. Estimated roughly, it contributes to about one-third of the total revenue accumulated by the government.
As per the 2017 review, in Texas state sales tax was 6.25% percent in 2017. On the contrary average, local sales tax was 1.94%, a total of two levied on Texas individuals was 8.19%.
3. Excise Tax
Selective products have excise tax levied on them.
Usually, the amount is included in the price paid by the purchaser. In this category, items like petrol, diesel and such items are put.
According to the survey, Texas levies a total of 20 cents on each such item.
Effect of Tax Regression In Texas
Unfortunately, due to the regressive tax system in Texas, it is overflown with crisis. Many services provided are not up to the mark due to lack of funds.
Two major sectors are currently facing challenges. Firstly, educational second healthcare. Both are vital sectors and neglect can lead to major consequences.