By Tom Aldred, President. Oct. 9, 2019
Texas continues to grow at an astounding rate. More than 1,000 people still move to the Lone Star State every day. The majority come from other states within the U.S., with California and New York accounting for the top two spots on that list.
Another list with California and New York near the top? State income tax rates.
Texas’s income tax rate? Zero.
And voters will soon have the chance to lock that zero rate into the Texas Constitution. It’s critical that people who have moved to Texas to pursue the greater economic opportunities for themselves and their families vote accordingly; not taxing personal income is a key part of what makes Texas such a prosperous place to live.
Proposition 4 on the November 5 constitutional amendment ballot gives voters an opportunity to put language in the Texas Constitution prohibiting a state income tax. Texas does not currently tax personal income and there is already constitutional language requiring voters to approve the imposition of such a tax. However, this approval can be sought with just simple majority approval in the legislature. If Proposition 4 is adopted, an income tax would require a two-thirds vote in the Texas House and Senate, before majority approval by the voters of Texas. Given that HJR 38 (the resolution that put Prop. 4 on the ballot) passed the Texas House 100-42 and the Senate 21-10, this would be a high bar to pass.
Despite social media memes implying the opposite, an income tax will not be imposed if Prop. 4 fails. The purpose of Prop. 4 is to set the highest bar possible to the future imposition of a state income tax in Texas. This is important because, as TCCRI’s most recent State Budget & Taxation Task Force Report explains:
"By strengthening the constitutional language on a state income tax, Texas could send a message to voters not only in Texas but across the country, making clear that people working in Texas can count on retaining more of their paychecks, not just today but in the future."
As noted above, having no or low income taxes correlates strongly with net inward migration. A study by the Heritage Foundation showed that the nine states with no income tax grew by 830 people per day over a decade, while the nine states with the highest personal income tax rates shrank by 933 people per day over the same period. Employment in the nine no-income tax states also grew by 10 percent, compared to just 4.3 percent in the high-income tax states. (Side note: Texas leads that list with 20 percent employment growth). So, the benefits are clear: by enabling people to keep more of the income they earn, prohibiting an income tax attracts people to Texas, grows the workforce, and will enable the state to keep growing and becoming more prosperous.
Proposition 4 should pass overwhelmingly with support from lifelong Texans as well as those who moved here more recently from high income tax states, and everyone in between. Not taxing income is part of what has made Texas the best state in the country to live, work, and raise a family. Welcome to Texas. Please vote accordingly.