Many Texans believe that the current tax system in Texas is unfair.
state and local tax system fails to provide a stable source of revenue from balanced .
resources. There are many different ways to measure the impact of a tax system on .
various income groups. The most frequently used method defines taxes as "progressive," .
"regressive" or "proportional," depending on what happens to taxes paid as a percent of .
income as income changes. A progressive tax is one where the percentage of income .
taken by the tax increases as income increases. A regressive tax works just the opposite, .
taking a larger percentage of income as income decreases. A proportionate tax is one .
where the percentage remains the same as income goes either up or down. Using the .
above definitions, the overall State and local tax structure in Texas is .
regressive. Lower income families pay a higher percentage of their income in .
taxes than do higher income families. Sales tax is the main reason poor families remain .
poor in Texas because they pay up to almost 10% of their income towards the sales tax. .
Middle income families pay upward of almost 5% while high income families pay up to .
1.5%. The sales tax is so unfair because it is regressive and it is based on consumption. .
Lower income families spend all of their income and more just to provide necessities for .
their family. People who are in the higher to middle income can afford to spend their .
money on necessities and luxuries. Any tax that is tied to consumption like the sales tax .
or value added tax will be burdened more by families with less income. Adam Smith, an .
eighteenth century economist, believed taxes should be based on the ability to pay. In .
his book, The Wealth of Nations, Smith based the ability to pay taxes on four different .
principles: equality, certainty, convenience of payment, and economy of collection. If .
Texas based their tax system on the ability to pay, lower income families would pay less .