18 MONTEREY COUNTY WEEKLY APRIL 13-19, 2023 www.montereycountyweekly.com Tax Time A new study shows that Californians pay less in tax than Texans, except the very rich ones. By Jonathan Vankin FORUM Texas politicians love to take jabs at California, claiming that their state is somehow a better place to live and locate a business, partly due to lower taxes. Tech companies, in particular, have been reportedly fleeing California for the Lone Star State, led by Elon Musk taking Tesla to Austin. But a new report by the financial site WalletHub contradicts that popular tax-exodus narrative. In fact, the study finds, when the total tax burden levied is taken into account, Texans pay a higher percentage of their incomes in taxes than Californians do—quite an accomplishment considering that Texas has no personal income tax. The cash to keep the state operating has to come from somewhere, so Texas slams its residents with relatively high property and consumption taxes. California charges its residents income tax under a progressive tax system, meaning the tax rate rises with the amount of personal income earned by a taxpayer. Rates range across nine brackets, from 1 percent for the lowest income-earners to 12.3 percent on personal incomes of $677,276 or higher. Taxpayers who pull in more than $1 million pay a surcharge of 1 percent on top of that highest rate. As a result, California pulls in 69 percent of its general fund revenues from personal income taxes, and just 16.2 percent from sales and use taxes. Texas gets 55.7 percent of its revenues from sales and use levies. Property tax is what local governments collect. In 2019, across the U.S., local governments collected $559 billion in property taxes, according to the nonprofit research group Urban Institute. Thanks in large part to Proposition 13, the 1978 ballot measure that caps local property tax rates, California taxpayers enjoy the 16th-lowest overall property tax obligation. Texans, meanwhile, shoulder the fifth-highest property tax load in the country. California’s effective overall property tax rate is just 0.75 percent; Texas’ is 1.74 percent. The difference in property taxes is one of the most important factors in giving Texas an effective overall tax rate of 12.73 percent, compared to 8.97 percent in California. There is one group of taxpayers who have an easier time of it in Texas—very rich people. High six-figure earners in Texas—those who rake in at least $617,900 per year—pay 3.1 percent of their income in taxes, according to the Institute of Taxation and Economic Policy (ITEP). The top 1 percent in California make somewhat more ($714,400), but pay a whole lot more—12.4 percent. On the other hand, according to ITEP, California is much friendlier to low-income taxpayers. The bottom 20 percent of California earners (under $23,200) pay 10.5 percent in taxes, compared to 13 percent for the same segment (earners under $20,900) in Texas. The disparity earned Texas the dubious distinction of being the second-most regressive tax state. A progressive tax system works the opposite way. According to ITEP, California has the most progressive tax policies in the country. Jonathan Vankin writes for californialocal.com, where this story first ran. California Local is a statewide news network and civic engagement tool that helps Californians “Discover, Connect and Act.” OPINION California is much friendlier to lowincome taxpayers. PRESENTED BY
RkJQdWJsaXNoZXIy MjAzNjQ1NQ==