from the Dallas Fed
— this post authored by Jason Saving
I n recent years, income inequality has become an increasingly prominent issue nationally and in Texas. Statistics suggest a significant number of people face financial stress in their dayto- day lives. Texas has more inequality than the median U.S. state, a poverty rate 1.6 percentage points above the national average and the highest rate of residents lacking insurance (Chart 1).
When it comes to state and local taxes, Texas’ burden is widely viewed as relatively low and attractive. Yet such a characterization may not hold for everyone, especially those at the lower end of the income distribution. Lawmakers balance competing interests when determining optimal tax policy.
Understanding the state and local tax burden – both how large it is on average and who bears it – is necessary to evaluate the current tax structure.
Taxes Texans Pay
While Texas assesses a wide variety of taxes on its residents and businesses, the largest by far is the state sales tax, which now provides nearly 60 percent of state tax revenue. The sales tax applies to most goods and some services purchased in the state. The tax rate is relatively steep – the 12th highest in the nation – because Texas does not have an income tax.
[click on image below to continue reading]
Source
https://www.dallasfed.org/~/media/documents/research/swe/2017/swe1703b.pdf
