So, I understand in Texas that there are few taxes. For instance, there is no income tax. I also understand that corporations pay little (if any, it was unclear) taxes as well. The sales tax is less than it is here in Chicago (8.75% IIRC).
How does the state get money to operate? Are property taxes through the roof (as it were)?
Texas, along with a few other states, has no state income tax (yay!). They say there is no corporate income tax, but there is a franchise tax.
From the Harris County Appraisal District’s website, regarding property tax rates:
Property taxes vary by area but are roughly $34/$1000 of property value.
Our base sales tax is 6.25%, but many poltical subdivisions append to that rate (here in Houston, it’s 8.25%). Transactions subject to sales tax were expanded in the late '80s to include many services.
Gasoline is taxed at $0.384/gallon and cigarettes are taxed at $0.41/pack of twenty.
Texas does collect significant royalties from oil and natural gas producers.
I’m sure there’s more to be said, but that’s a quick look.
The state gas tax appears to be 20 cents(18.4 is the federal tax) and placed the state about in the middle. The cigarette tax placed Texas in the bottom third – about 25 states have a tax of 60 cents or more per pack.
Oh, and we’ve got, as do many other states, the Lotto (which I’ve heard described as the tax on people who don’t understand statistics). Anybody know what that contributes to the state budget, and where it’s applied?
All the good information listed above is subject to a big caveat, however. By far the biggest issue the Texas Legislature will face this year is reforming the current school financing system, which everyone hates and which has been ruled in violation of the Texas Constitution by the state courts. Just about all the proposals on the table involve creating new taxes.
This page (warning: PDF file) has lots and lots of tables about Texas state finances.
Table A-3, on page 18, seems to address several of the questions raised in this thread. It sets out the (estimated) Texas State revenues for 2005, and the picture which seems to emerge is this:
Total state tax revenue will be about $31.3m.
Just over half - $16m - comes from the “Limited Sales and Use Tax”
The rest comes from a slew of about 35 other taxes, fees and other revenue sources, none of which yields more than $2.4m (Motor Vehicle Sales and Use Tax) and many of which yield less than $100k.
Other sources yielding more than $1m are Gasoline Tax (I presume this is a tax on consumption, not production), Franchise Tax, Insurance Premium Taxes, Natural Gas Tax and “Other General Revenue Fund Revenue”, whatever that is.
The state lottery yields $1m. It goes into school funds.
There are revenues of a further $23m, which are effectively transfers from the Federal government, and about $7m of “other funds”.
Bottom line:
State taxes provide about half of the state’s revenue. I have no idea how that compares to other states.
Of the state tax revenue, about half comes from the sales tax. The rest comes from an astonishing variety of taxes, most of which individually yield very little.
I haven’t compared with other states, but you have to suspect that in terms of efficiency – tax revenue divided by cost of administration and collection – this may not be the optimal solution.
Texas may have been driven into this tax structure by a political imperative not to levy an income tax.
I don’t know how the per capital tax take in Texas compares with other states of a similar level of wealth. Not having an income tax doesn’t necessarily translate into having lower overall taxes if there is a slew of expenditure taxes instead.
minor note on UDS’s source: All of the numbers listed are in thousands of dollars - so the total revenue is 31.3 billion, not 31.3 million dollars.
(For comparison, New York City has revenues of about 34 billion, plus or minus)