Friday, July 25, 2014

Should Texas implement a state income tax.

          A tax is a compulsory contribution to state revenue, levied by the government on workers' Income and business profits or added to the cost of some goods, services, and transactions. State income tax is a way the state government levy taxes on their residents' income as well as their businesses and investments.  Currently, seven states which includes Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming has imposed no income tax whatsoever on their citizens. Two other states, Tennessee and New Hampshire, have no tax on wages or business income, reserving taxes only for investment income from dividends and interest.  Most people believe that enforcing state income taxes help in the growth of the economy of such state but have neglected the impact of such decisions on the income of the resident and the cost of living in such state. I believe that Texas should not implement income tax on its resident because of the Standard of living, income of the residents and the migration pattern in Texas.  
           However, when comparing Texas with some other state that implemented state income tax, you will agree with me that the cost of living in Texas is low in the sense that things are much affordable here in Texas in terms of education, housing and other things; an average person can easily survive in Texas than most states with income tax.  Most people are able to survive here because of there is no such taxes cutting on their monthly income thereby making the standard of living obtainable by most people.
            Also, Texas should not implement state income tax because of the population growth (migration pattern) in the sense that most states with no income tax have a big competitive advantage over their taxing counterparts.  That is most of those states had above-average population growth. Nevada grew by the largest percentage of any state, while Texas had the biggest raw population gain over the decade.  This shows that lots of people might prefer to live in a tax free state than a state with state income tax as well as high standard of living.
             Last but not the least, the income of Texans is very low having the minimum wage of $7.25 per hour when compared to states who pay state income tax like Massachusetts having a minimum wage of $15 per hour. An average Texan with a family, working 40 hours a week and receives the minimum wage might not be able to afford extra tax after having the Federal income tax, social security tax and Medicare deducted from his income.  In other words, the State's minimum wage has to increase for it to levy state tax.
              In conclusion, all other things being equal, most people might gravitate to states with no income tax having an affordable standard of living despite the low income. If these trend continues, then high-tax states might find themselves facing significant difficulty in attracting the people they need in order to promote growth

No comments:

Post a Comment