Middle class pays higher tax in Texas than California (Murrieta: sales, renter)

[earthisle]

There seems to be a widespread belief that Texas is a low tax state, and I see that cited very often as a reason people move from California. Perhaps more importantly, it's cited as a reason Texas is better than California. Other states too, but primarily California as it's closest in size and geography. As with many things in Texas, it's just successful messaging.

The Institute on Taxation and Economic Policy does a report where they look comprehensively at each state's tax system including both state and local taxation, and one of the products is state by state breakdowns on how much each income percentile pays in taxes. https://itep.org/whopays/


Rates paid by various household income levels:
Middle 20%: Texas 9.7% vs California 8.3%
Poorest 20%: Texas 13% vs California 10.5%
Top 1%: Texas 3.1% vs California 12.4%





Taxes in California are relatively flat, bowing down slightly in the middle of the income range, while in Texas taxes are highly regressive. If you see an overall percentage rate being cited for California vs Texas or any two states, you're being shown a very partial picture that doesn't tell you what a normal working person pays. Texas's overall tax rate is highly skewed by the very low taxes the richest people pay. This isn't by accident. Texas has no state income tax so there's no progressive offset to the regressive sales and property taxes. And it's even worse than those statistics because they don't include property tax passed on to renters by landlords.

[Tulemutt]

Very interesting work displayed on that website. Washington state gets the worst black eye ... Texas almost as bad. AZ sucks. Nevada sucks. California comes out looking the best ... whoa! And the OP is chiming in as a Texan? This is gonna be an interesting thread.

[expatCA]

Originally Posted by earthisle

There seems to be a widespread belief that Texas is a low tax state, and I see that cited very often as a reason people move from California. Perhaps more importantly, it's cited as a reason Texas is better than California. Other states too, but primarily California as it's closest in size and geography. As with many things in Texas, it's just successful messaging.

The Institute on Taxation and Economic Policy does a report where they look comprehensively at each state's tax system including both state and local taxation, and one of the products is state by state breakdowns on how much each income percentile pays in taxes. https://itep.org/whopays/

This isn't by accident. Texas has no state income tax so there's no progressive offset to the regressive sales and property taxes. And it's even worse than those statistics because they don't include property tax passed on to renters by landlords.

Humm,


TX Sales tax:


The state sales tax rate in Texas (TX) is currently 6.25%. Depending on local municipalities, the total tax rate can be as high as 8.25% https://www.google.com/search?client...exas+sales+tax


What is the sales tax in your city?



The property tax in TX is higher as a percentage, but lower as homes cost significantly less when compared to size, etc., to a similar CA home.



I paid the a higher tax in CA on my 3000 sq ft home on a 7000 sq ft lot as I did on my TX home that was 1800 sq ft, but on a 3.5 acre lot, with a huge pool and a 1500 sq ft barn and several out buildings. In CA my taxes on the same type home in a similar location, would be through the roof.


Then add in the income tax I paid in CA and TX was wayyyyy better.


Here is a home that at least comes close in size in a similar area, but a smaller lot to the one I had in TX for comparison.


https://www.zillow.com/homedetails/4...18163223_zpid/


The property taxes in 2018 based on the price it sold for in 1996 and covered by prop 13 is still well above the TX house in 2018 by about $1000.00. Less land, no pool, no nice barn, etc.


The Tax on the home I sold in Murrieta now is over $ 4000.00 and the house in TX is now about 1/2 that in property taxes. If you bought the Murrieta house today your taxes would be near $9000.00 if not a bit above due to Mello Roos, etc.


Tax by % has very little to do with tax per person/family.

[payutenyodagimas]

its just like the fable of the boiling frog:

The boiling frog is a fable describing a frog being slowly boiled alive. The premise is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. Wikipedia

[lvmensch]

Interesting but regression is the criteria not taxes. For instance NV taxes are less than TX or CA at all income levels.

So NV is almost as regressive as TX but the taxes paid are less than either CA or TX.

[expatCA]

Originally Posted by lvmensch

Interesting but regression is the criteria not taxes. For instance NV taxes are less than TX or CA at all income levels.

So NV is almost as regressive as TX but the taxes paid are less than either CA or TX.

In Income taxes maybe. But in virtually all others CA hits the poor the worst. The % is the same for all, but a higher income allows less concern.

[lvmensch]

Originally Posted by expatCA

In Income taxes maybe. But in virtually all others CA hits the poor the worst. The % is the same for all, but a higher income allows less concern.

Nope. At all income levels NV taxes are lower percentages of income than those of CA. And they are a huge amount less at high income...but still less in at the bottom.

[hikernut]

Originally Posted by earthisle

Texas has no state income tax so there's no progressive offset to the regressive sales and property taxes. And it's even worse than those statistics because they don't include property tax passed on to renters by landlords.

Assuming lower-income people in CA are more likely to be renters than their cohorts in Texas, the bolded part actually is making the CA numbers look better (lower). A renter in CA with $3000/mo rent is not paying any property tax… only sales tax and income tax. Conversely any homeowner in TX will have a property tax bill, even one with much less than $3000/mo mortgage payment.

[DKM]

Originally Posted by expatCA

Humm,


TX Sales tax:


The state sales tax rate in Texas (TX) is currently 6.25%. Depending on local municipalities, the total tax rate can be as high as 8.25% https://www.google.com/search?client...exas+sales+tax


What is the sales tax in your city?



The property tax in TX is higher as a percentage, but lower as homes cost significantly less when compared to size, etc., to a similar CA home.


Tax by % has very little to do with tax per person/family.

7.25% where I live.

Texas taxes services and CA doesn't. That really adds up. Where the average tax rates sag in CA is from the long term prop 13 owners.

[expatCA]

Originally Posted by DKM

7.25% where I live.

Texas taxes services and CA doesn't. That really adds up. Where the average tax rates sag in CA is from the long term prop 13 owners.

A good thing too as in CA just about every other tax is high. Plus Mello Roos.