Fees and Taxation in the State of Texas

Introduction: History and evolution

Texas has levied fees and taxes since 1800's. In the recent past (since 1989) it has enjoyed a significant 6.4% average annual growth in total tax collected. However, the state of Texas has a reputation of low taxes and service.

State taxes contribute to nearly half of Texas's revenue as primary taxes generate $50 billion annually. The comptroller's office in Texas currently collects over sixty different fees, assessments and taxes. The collection includes sales taxes gathered on behalf of over 1400 cities, local governments and counties around the state (Texas taxes).

Texas has made several changes to tax and fee policies over time. The Texas Tax Reform Commission (TTRC) was formed in 2005 to modernize and reform the tax system structure in the state. It is a tax donor state which decided to create more incentive programs than any other U.S state to attract businesses. The revenue lost through lacking a state income tax is recovered through other state level taxes like sales tax and property tax. Texas has debated over business value-added tax (VAT) in the past but has not enacted it (Brown 1)

Current Taxes levied

I)    Income taxes

Texas is one among the only seven states that do not tax individual wage income. The residents simply do not pay personal state income tax. The constitution of the state (article 8) restrains passage of personal income taxes. However, Texas collects a gross receipts tax from some businesses in the state as supplemental tax revenue (Texas Income Tax Rates For 2016).

 II)   Sales taxes

The state of Texas has a state sales tax rate of 6.25%. Use taxes and local sales levied by special purpose districts, counties, cities and transit accumulate to 2% of the sales tax thus making the cumulative total on purchases as high as 8.25% (Bell).

  III)   Personal and real estate taxes

Local taxing units like school districts, counties and cities assess and amass property taxes on all property (those not exempted by federal or state law) that is tangible and produces income. Personal property that doesn't earn income to the owner like airplanes, travel trailers, automobiles, and boats are in most cases exempted from taxation. Total tax rates may vary from one location to another and differ from yearly.

Residential homestead exemptions are usually available for anyone who owned property on 1st January. A greater exemption is available for physically challenged taxpayers and the elderly who are above 65 years of age. Homeowners who want to apply for residence homestead exemption should file a form (50-114) with their appropriate taxing jurisdictions between 1st January and 30th April.

IV)    Estate and inheritance taxes

Texas does not levy inheritance taxes on its residents. The estate tax is not imposed on estates of owners who passed away in 2005 or after due to a federal estate tax credit phase-out in the state.

Policies that can alleviate taxation in the state of Texas

Texas should stipulate strict regulations on how funds gained by taxation can be used to execute different functions. Some of these are the development of economic infrastructure, social engineering, and public works. Law and order enforcement should be prioritized instead of come expenditures on war.

State taxes should also be used to sponsor welfare and public services such as; Pensions for the elderly, public transportation, healthcare systems, unemployment benefits,  and education systems. It should also fund public utilities like water, energy and waste management. Reluctant subsistence producers can also be alleviated to cash economies through cash taxes.

  Texas can as well adopt value added tax and personal income tax so as to increase its revenue and serve its people more It would be more important for Texas to find means of having a long term and reliable source of funding for public utility.