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I’m in the airport in San Diego right now – and the girl beside me was just typing away in her Keller School of Management forum about taxes. I couldn’t help but read over her shoulder (don’t like it? Get a privacy filter).
The gist of her question she was posing (back to her professor) was: “How is it that Texas, a fiscally responsible state (her words, not mine) has no state income tax and is doing fine financially yet California which has one of the highest income tax rates in the country is nearly bankrupt?”
She then went on to paste a piece of propaganda from a Texas business web site about how Texas is good for business because there is no income tax.
I find this amusing because the FIRST thing I think of when I hear a state has ridiculously low or no income tax is – how much is property tax? Dallas property tax is around 3%.
Most cities in California hover around 1% (San Diego is 1.1%). One other big difference? In California your tax rate is based on the purchase price of your home. So if you bought your house in Beverly Hills in 1932 for $40,000 – and it is worth $2.2 million today – you pay 1% on the $40,000. Seriously.
In Texas, like most states, it’s based on assessed value. So not only can the tax rate go up but if your assessment goes up (improvements, neighbors sell high, etc.) your base goes up as well.
I don’t mean to make this a lesson in taxes – I’m hardly qualified – but her narrow view of the world seemed to purport that states only get income from income tax. While it may be true that Texas is far more fiscally responsible than California, her argument is ridiculously incomplete. She would need to look at a host of other ways states make money.
Aside from income – she would also need to look at how each state spends its money. Quality of roads? Criminals in the system? Social programs? Size of government? Parks maintenance? I could go on.
As people try to make the case for their way of thinking, they need to be more responsible in the information they present, look at all sides of an argument and try to gather relevant data to draw a conclusion.
I’m definitely not a data-driven/analytical person – so the fact that I’m floored enough to write about this speaks volumes.
And did I mention she’s a GRAD STUDENT? Seriously. I hope she comes out of the program with a broader view of the world and its problems.
