Recently, we heard from a listener with a story about how he and his wife had moved to Texas because we pay no state taxes in Texas. But the more our listener looked at his finances, he realized, well, he does pay taxes: school district taxes, medical district taxes, on and on.
He began to wonder – does the sum of all these local taxes end up about the same as state income taxes elsewhere?
Thomas Mangold, founder of CEO of Mangold Group CPAs, says we shouldn’t feel so smug about not having state taxes. States generate revenue based on what Mangold calls the Big Three: property tax, sales tax and income tax.
“Every state has to pay its bills,” he says. “When you look at what we pay overall, it’s still relatively low on the continuum.”
What you’ll hear in this segment:
– Which states has the highest and lowest percentages of income paid into taxes
– The range of percentages of their residents’ taxes as percent of their income, including where Texas lies
– Despite not paying the state’s high property taxes, how non-property-owning Texas residents still pay close to 12 percent of their income in consumption taxes