Texas attracts entrepreneurs with no state income tax but compensates with high property and sales taxes illustrating the complexity and trade-offs in state tax systems.
A Tax Haven for Entrepreneurs?
When my family moved from Nebraska to Texas in the 1970s and they wanted to save money by living in a state with low taxes. Texas doesn’t have a state income tax on the money people earn from working which made it a great place for my dad to start his business. However, Texas makes up for this by having some of the highest property taxes in the country along with other taxes to pay for schools, healthcare, and roads.
(photo: Wonderopolis)
How Different Systems Impact Your Wallet and Quality of Life
Each state can create its own tax system which can be quite complicated. Just like the U.S. government can collect federal taxes, state governments can collect different types of taxes on income, sales, and specific goods. These taxes help pay for the public services that residents use. People in the state can also vote on tax-related issues to decide how and what taxes are collected to support different programs and services.
States like Texas and eight others do not tax the money people earn from working but they often have higher sales and property taxes to make up for it. This can make living in these states more expensive, especially for people with lower incomes who feel the impact of high sales taxes more. States with no income tax might save people money but there are trade-offs such as lower-quality public services and higher costs in other areas. This shows how state tax systems are complex and affect people in different ways, according to the report of Fast Company.
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