NCPA - National Center for Policy Analysis

State's Low Tax Reputation at Risk

December 6, 2002

Texas's reputation as a low tax state attractive to new industry hangs in the balance, according to economist Richard Vedder. The Texas system needs "moderate changes designed to make the Lone Star State even more attractive to individuals and businesses," he says.

In the fifth installment of his comprehensive six-part "Taxing Texans" series, Vedder finds that in the past, the state's "low tax burden helped to propel the state's economy to high rates of growth."

  • But the study also finds that Texans are paying more in taxes than ever before, and an increase in taxes could throw the state's economy into a tailspin.
  • Estimated state tax collections in fiscal year 2001 were more than eleven times as large as they were in fiscal year 1972
  • Tax revenues have grown at a compounded annual rate of 8.87 percent over the past 29 years," Vedder found in his study for the Texas Public Policy Foundation.
  • Texas's state and local tax burden ranks 47th overall, but nine other states have similar burdens and could easily move ahead of Texas in the race to attract new jobs -- and Florida, a model for any changes, ranks better than Texas.

Texas has room to improve, Vedder says. However, legislators should take it easy and go slow - the Texas system is not in need of radical reform. Texas needs moderate changes designed to make the Lone Star State even more attractive to individuals and businesses.

Source: Richard Vedder, Ph. D., "Attracting New Jobs in Texas: Tax Burdens Compared to Other States," Texas Public Policy Foundation, August 2002.

For text

http://www.tppf.org/

 

Browse more articles on Economic Issues