Reforming The Texas Taxing System Essay, Research Paper
Reforming the Texas Taxing System
Texans are some of the most reluctant people when it comes to paying taxes in the nation. The state desperately needs a reform that would change the way taxes are collected but Texans are suspicious of change and would rather settle for the insufficient tax scheme that exists rather than take the chance of reforming it and having government raise taxes or implement a state income tax. As of now, Texas has no state income tax and while this appears to be a good deal in outside appearance, the truth is that this places more of the burden on the poor.
Education remains one of the most difficult government funded projects to keep running efficiently and up to people s standards. Without out a state income tax, revenue for funding the public schools in Texas must come directly from property taxes taken by local governments. This places a disproportionate burden for paying taxes on homeowners and renters. People who have wealth in investments and bonds have managed to avoid paying their fair share of taxes on these assets. Interest and investment income for the state was only five percent of the states revenue in 1995. It was 6.3 in 1992. This is probably because of a lowered interest rate that result in less of a return on investments for the state. Raising interest rates would generate more revenue for the state.
Giving Texas a state income tax would relieve some of the burden from the poorer citizens in Texas. An income tax should be fair to both the poor and the wealthy. We all use highways, we all need clean water, sewage systems, police and fire departments, and other necessities. I would propose an income tax similar to the federal income tax that takes a percentage of your income up to a certain brake off point. The state income tax should be far less than the federal income tax since the state receives most of its revenue from the national government. I also propose more taxing of assets like investments and bonds to take some of the burden off of the poor.
Some interest groups working for big business have successfully lobbied the Texas legislature out of paying their fair share of taxes. Still, the business community bears almost 60 percent of the tax burden. Other businesses are successful at worming their way out of paying their share. Hyper pluralism may explain this behavior. Interest groups can overwhelm the weak Texas government and protect their own special interest over the interest of the general public. Making the Texas government stronger and more centralized in the hands of the governor would relieve pressure from big business interest groups. In the Texas taxing system, some businesses pay more than their share and other don t pay enough taxes. One of the reasons for this is because of the Texas tradition of dependence on revenue from agriculture and energy.
The population of Texas is growing at a very high rate. In 1994 Texas ranked first in the nation in total population growth. The largest part of the population of Texas is sixty-five years or older. We can be sure that the demands for public services will increase over the next decade. There will need to be some way to collect more revenue for the state in order to keep up with these demands.
The cost of collecting taxes must be considered when we are discussing tax reform. A tax should be evaluated with regard to how much money it will cost to collect the taxes. A more narrow tax will cost more to administrate than broad based taxes like income and property taxes. More taxes should be in these forms though property taxes are already high enough. I would not suggest raising property taxes.
The state lottery generated 2.3 percent of the state revenue in 1995. The lottery has become the third largest source of nontax revenue. The problem with the lottery is that, according to economists, expenditures on lottery tickets decrease the amount that consumers spend on other goods reducing the revenue in taxes for the goods that are not expended. Another popular complaint about the lottery is that it feeds off of the impossible hopes and dreams of the poor. I tend to think that if a person wants to buy the lottery ticket then that s a portion of taxes that I don t have to pay. We all know that the chances of winning are next to nothing. People have fun with it. I think it s a good idea. I doubt that the loss of revenue due to the spending on lottery tickets exceeds the money collected from the lottery.
The existence of a state income tax could reduce the amount of money taxed on property. Property can be taxed by several levels of government. I think its unfair to tax property so much. The combined tax burden may be increased significantly beyond the growth of ones personal income. The high rate of property tax deceases the demand for owning homes declining real estate value and does not encourage people to own their own homes. This is bad for communities since it is in the general public s interest to live in nice, safe neighborhoods attractive to parents who want their children to grow up communities of home owners.
The Texas government depends to heavily on regressive taxes such as the sales tax that disproportionately taxes the poor and because of its complex and narrow base; the costs of administering these taxes are too high. Lower income groups receive fewer benefits generated from taxes than the wealthy that, for example, use highways and air travel more often. Giving Texas a state income tax would make the taxing system more fair.