The taxes paid by Texas residents and businesses are drawing more attention thanks to Gov. Rick Perry's White House bid.
On the campaign trail, Perry has touted the low taxes levied in Texas as a key to the state's economic success during the economic downturn.
We examined how Texas taxes compare to other states in a story in today's paper. The article was the first in an occasional series examining the state's economic record under Gov. Rick Perry.
From the story:
When many politicians and pundits proclaim Texas a low-tax state, they're referring to the fact that there's no personal income tax and that direct taxes on businesses are relatively low.
What draws less attention is that sales, property and wireless service taxes are higher in Texas than in most other states.
At the state level, Texas draws most of its revenue from federal funding and sales taxes. At the local level, property taxes play a major role.
While most local governments in the states levy property taxes, the approaches to state taxes vary widely, including no income or sales tax (New Hampshire), an income tax but no sales tax (Oregon) and, most common, a mix of both. Many economists say the best approach depends on a state's characteristics, such as natural resources, quality of workforce and level of tourism.
Below is a graphic that ran with the story comparing taxes levied by the state of Texas to the average tax structures from all 50 states. Property tax isn't in the Texas chart because the property tax is only levied by local governments in Texas.
What's clear is that Texas government relies more on sales tax than most other states. That appears to be an approach Perry thinks might work at the federal level too. In his book Fed Up!, Perry suggested possible ways of reforming the federal tax code including getting rid of the income tax entirely and instituting a national sales tax.
[Graphic: Don Cook]