In Fiscal Year (FY) 2013, Texas collected $102.5 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Texas taxpayer can afford this level of taxation.
As shown in the Chart 1, Texas’s state and local tax burden (tax collections divided by personal income) was the twelfth lowest in the nation for FY 2013 at 9 percent—this is -13 percent below the national average of 10.3 percent. As shown in Chart 2, Texas’s tax burden has increased over time by 40 percent to 9 percent in FY 2013 from 6.4 percent in FY 1950.
Texas’s low state and local tax burden can, obviously, be attributed to not having an individual or corporate income tax since they tend to be progressive (higher tax rates on higher levels of income) which increases the tax burden over time.
However, Texas’s lack of an income tax is diminished by other higher than average taxes such as the property tax (3.7 percent, 13th highest), the sales tax (2.8 percent, 15th highest), and all other taxes (2.5 percent, 10th highest). All other taxes, of course, being driven by severance taxes on the extraction of oil and gas.
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Texas—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The Texas counties with the highest local government tax burden include: Loving County, TX (99.6 percent), King County, TX (53.2 percent), and Kenedy County, TX (42.1 percent). The Texas counties with the lowest local government tax burden include: Randall County, TX (1.5 percent), Coryell County, TX (1.9 percent), and Eastland County, TX (2 percent).
J. Scott Moody has over 18 years as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.