Understanding Texas Taxes–New Pub

The Understanding Texas Taxes publication has been updated and is now available under Texas Taxes Publications as well as in the AgriLife Bookstore (free download).  The publication is is designed to policy makers, staff, and Texas tax payers understand the state’s tax system. It discusses the most common criteria for evaluating the effects of major Texas taxes:

  • economic efficiency – propensity to maintain (not distort) the allocation of consumers’ and firms’ choices among goods, services, and investments.
  • economic competitiveness – a firm’s ability to compete with those outside the state or the state’s ability to attract new business
  • administrative simplicity-ease for the taxpayer to understand and ease and expense for the taxpayer to comply with and the government to assess and collect
  • adequacy-generation of sufficient revenue to meet public needs
  • equity (or fairness) – similar effects on people in similar circumstances (horizontal equity) and differential on people in different circumstances (vertical equity)

The glossary provides more thorough definitions of these terms and other tax terms.

Local taxes evaluated include property and sales taxes. State level taxes include sales and motor vehicle sales taxes, motor fuels taxes, alcohol and tobacco taxes, and the franchise tax. Texas does not have a state property tax or income tax.

Lower income households continue to pay a larger share of their income to most Texas taxes. Higher income households spend a small portion of their income on these taxes, although wealthy households pay more in total. Despite perennial debate about local property taxes, these are among the least regressive taxes in Texas.

The current publication presents a more streamlined set of information about Texas state and local tax rates as of 2021. Historical tax data provided in previous versions of the publication are available from the Texas Comptroller, and their link as well as a recent summary of state revenues and expenses is posted under Community Data Resources.

The publication is released as the Texas Comptroller reports April 2021 sales taxes increased 31.4 percent over the April 2020 figures with retail and restaurant expenditures, down sharply early in the pandemic, showing strong growth. Collections were at a record level and up 19.2 percent over April 2019. In May, a strengthening economy prompted a $3.12 billion increase in the Comptroller’s revised revenue estimate for the 2022-23 biennium as compared to the January estimate, providing leeway to Texas lawmakers wrapping up the 2021 biennial legislative session.

Dr. Lonnie Jones’s leadership is missed in the current revision of this publication. Dr. Jones passed away in 2015. Twinkle Singh, Master of Agribusiness graduate student, contributed to the project.

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