Texans carry heavy burdens in property and sales taxes compared to other states

Property tax

Texas ranks somewhere in the middle in an annual study of state tax burdens, but that’s thanks mainly to the lack of a state income tax. Texas’s property and sales tax burdens are among the highest in the nation.

In Wallet Hub’s annual tax burden study, released in advance of national tax day, Texas ranked 33rd overall (a ranking of 50 would mean its taxes were the lowest). The tax burden is the percentage of personal income that residents pay toward state and local taxes. In Texas that figure is 8.2%.

The highest-taxed residents, according to the study, live in New York (13%), Hawaii (11.7%) and Maine (10.8%).

In the areas of property and sales taxes however, Texas made the big-hit parade. It ranked 11th in property tax and 10th in sales tax burdens.

Texas’ higher property taxes are unusual in the South. The rates for Arkansas, Tennessee, Oklahoma and Alabama are among the lowest five in the nation.

Joseph P. Cunningham, associate professor of accounting and business at Wilson College in Chambersburg, Pa., said property taxes are among the least fair methods of taxation because not all property is assessed at the same time and tax rates may not reflect actual current property values.

Andrew Felo, an associate professor of accounting at Nova Southeastern University in Davie, Fla., sees it differently. While sales taxes are a big hit with state and local governments, he said, they are among the most regressive taxes. Texas’ state sales tax rate is 6.25%, and local taxes boost that to 8.25% in most cities.

“I believe they are the least fair as they often result in lower-income people paying a higher percentage of their income in taxes than higher-income people pay,” he said.

Susan Pace Hamill, a law professor at the University of Alabama, said sales tax laws are particularly bad when they don’t exempt necessities such as food.

She noted that if a local government imposes a 9% sales tax rate, customers will pay $109 for $100 worth of groceries.

“That is terrible for struggling, low-wage workers trying to feed children,” she said.

David Williams, president of Taxpayers Protection Alliance, a taxpayer watchdog group, said that while migration patterns show that states like Texas benefit from people leaving higher-tax states like California and New York, there is still work to be done in Texas.

“That doesn’t mean Texas should stop cutting taxes like their high sales and property taxes,” Williams said. “The only things that should be messed with in Texas are the high taxes.”

Johnny Kampis can be reached at [email protected].


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