Conventional wisdom in the US holds that while California is blessed with natural beauty and a plethora of cultural options, those seeking lower taxes should head for Texas.
But over the last several weeks, a resurfaced 2018 graphic from the Institution on Taxation and Economic Policy (ITEP) has shown a number of social media users and news consumers that unless you are a member of the exclusive top one percent of income earners, taxes in Texas are actually higher than they are in California.
According to the ITEP graphic, total state and local taxes as a percentage of family income is 13 percent in Texas and just 10.5 percent in California for the bottom 20 percent of earners. The number drops to 9.7 in Texas and just 8.9 in California for the middle 60 percent of earners.
Texas defines low earners as those making less than $20,900 annually while California’s threshold is those who make less than $23,200 annually; for middle earners, Texas cites that as those who make between $35,800-$56,000 and for Californians, it’s $39,100-$62,300, per Houston Chronicle.
It is just the top one percent of earners that stand to dramatically benefit from lower taxes in Texas. The tax rate for those highest earners is 12.4 percent in California and just 3.1 percent in Texas, reflecting the two states’ differing economic and political philosophies. The top one percent of earners in Texas make $617,900 or more while those in California make $714,400 or more, reports the Chronicle.
That significantly lower tax rate for high earners, along with a different business tax structure, has played a part in luring the likes of Elon Musk and Joe Rogan from California to Texas in the last several years.
While Texas has no income tax, the graphic reportedly used statistics regarding not only income taxes, but also property and consumption taxes. Houston Chronicle ‘s survey found that the 2018 data is more or less unchanged today.
The high cost of living has also played a part in a recent surge of people choosing to leave California for Texas and a host of other states, a much-talked about influx that has played a part in remaking the housing markets of cities like Austin. While California will lose a seat in the House of Representatives next year, Texas will gain two.
After the graphic spread widely on the main economic forum on Reddit, a TikTok user named marzthedem posted about the data to a song called “The Joke is On You” by Nikki Williams with the caption, “Good OLE Republicans always taking care of the 1%.” The video has recieved more than 100,000 views.
Perhaps most significant, as a number of Reddit users pointed out, is that both California and Texas tax their poorest residents at a higher effective rate than nearly everyone else in their states.
