Starting on Reddit and picked up by the left wing Texas Tribune and other media is an incorrect claim that 'Most Texans pay more in Taxes than Californians'.
This false claims are based on a study by the left leaning Institute on Taxation and Economic Policy (ITEP).
(ETA: See also https://www.cato.org/blog/are-taxes-really-lower-california-texas )
This study is flawed in a number of ways, but ITEP itself admits in the first paragraph of it's study:
"Annual data from the U.S. Census Bureau appear to lend support to Texas’ reputation as a “low tax state,” ranking it 39th nationally in taxes collected as a share of personal income." (emphasis added)
In their study they point out correctly that " Texas’ sales and excise taxes are 19 percent above the national average' (emphasis added).
This true.
What is not true is that sales and excise taxes are lower than California, which has a higher sales tax. Sales taxes vary by location, but in Texas the sales tax rate is 6.25%, the maximum TX sales tax after local surtaxes is 8.25%.
In California state sales tax rate is 7.5%, and the average CA sales tax after local surtaxes is 8.44%, with localities with high population (i.e. where most people live) going as high as 10.75% .
And of course, the cost of living in California is higher in California, 152% of the national average compared to Texas, which has a cost of living that is much lower than the national average at 91%.
https://usabynumbers.com/states-ranked-by-cost-of-living/
If ITEP were being honest, they would contradict these bogus source, who are peddling misinformation by implying taxes are in California are 'lower in California for most Texans'.
The ITEP study claims, and let's give them the benefit of doubt, that
The poorest 20 percent of Texas taxpayers (earning an average income of $12,500 per year) actually face the 7th highest state and local tax bill in the entire country, at 12.5 percent of income. Similarly, among the next 20 percent of taxpayers (with an average income of $27,600 in Texas), state and local taxes are the 12th highest nationally.
To the extent they are taxed at all by California income tax, then they are taxed more than similar Texans.
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Note: Tax returns are like finger prints and butterflys. No two are like. The following numbers are estimates only.
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I am an Enrolled Agent, so I ran an estimated return for a single California taxpayer with a W-2 income of $28000, no dependents, with health insurance, taking the standard deduction for tax year 2021. This places the taxpayer right at the top of the 'bottom 40%' according to ITEP. If this taxpayer did not have health insurance his CA taxes would increase on the order of $750.
This taxpayer paid $258 in federal income tax and $17 in state income tax.
I then changed my hypothetical taxpayer's income to $12500 in W-2 income, now he or she owes no income tax and will receive a $2762 refund thanks to EITC and the 2017 Tax Cut and Jobs act, and little or no California income tax.
The reporting on the bogus ITEP numbers are clearly too good to fact check.
ITEP is doing this elastic man stretch because, in their own words:
The state’s lack of a personal income tax has been a major contributor to its reputation as a “low tax state,” but it comes at a steep price in terms of higher tax rates on low-income families.
When you figure the very large cost of living in California, no real living person in Texas from any income level would move to California in search of lower taxes.
If you review the ITEP studys they are actually upset that Texas doesn't have an income tax.
Reasonable people can disagree about the drawbacks and benefits of instituting a Texas State income tax.
People should stop claiming that Taxes in California are higher than Texas for any actual human! They should be honest and admit what they really want is a Texas state income tax.
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