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Comment by ddoolin | Hacker News Reader

Genuine question: how do states like Texas, Florida, etc. get by without taxing income? Do they not need that money for their operations? What is the difference between their government and California's?

I figure Florida makes it up with their tourism industry but Texas decidedly does not have that.

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> how do states like Texas, Florida, etc. get by without taxing income? Do they not need that money for their operations?

Sales tax and property tax.

> What is the difference between their government and California's?

Houstonian* here — Texas doesn't provide nearly the level of social services.

* I saw a post recently where someone said "I'm from Houston, not from Texas."

Houston, unlike the rest of Texas, has a strong Louisiana influence stretching back generations because of the shared oil and gas economy, and was enhanced by immigration and outflow from New Orleans by Katrina in 2005.

Hmm; apart from restaurants, I'm not sure many Houstonians would agree that Houston has "a strong Louisiana influence stretching back generations" — if anything we'd probably say it's the other way around (but then that might be just local boosterism).

As to Hurricane Katrina: We took in about 250K evacuees but only about 40K stayed permanently (which is a bunch, of course). I'd guess most of those were the sort who liked being here better, so they made lemonade out of the lemons that the storm forced upon them. [0]

[0] https://www.fastcompany.com/40460412/after-hurricane-harvey-...

I think a lot of what folks see as a "Louisiana influence" in Houston is mostly "Gulf Coast TX" vs the rest of Texas.

It's not that it's a Louisiana influence, it's that we're all on the gulf coast and all have a lot in common. (Not with New Orleans so much, but certainly with Lake Charles/etc.)

That somehow gets misnamed as a "Louisiana influence", when really it's just the region we're in.

Higher taxes elsewhere (which I think more sense anyway), and honestly probably just less wasteful spending and fewer beneficial (or potentially beneficial) programs.

To get a scope of how wasteful California regulations are and positions of people voting to propagate that insanity further:

https://www.washingtonexaminer.com/news/san-francisco-school...

Compared to California, most states depend less on income taxes and more on property taxes, which is part of the reason why property prices are higher in California.

I think California would have higher property taxes if they hadn't implemented prop 13 back in the 80s. Really messed up the state tax dynamics imho. Policy started from a good place but ended up with weird ripple effects.

Indeed. Proposition 13 was a monkey wrench.

>...implemented prop 13 back in the 80s.

Your math is a little off, it was 1978.

Oil is taxed quite a bit there, along with higher property taxes (some of the highest in the nation). But you'll also notice the roads aren't stellar, and many areas have issues with public education. Lack of state tax is reflected in all of this.

If you spend less money, you need less money.

Property taxes. This also means more taxes stay local and in the communities paying them. Of course there are opposing viewpoints on if this is good or bad. But the state still gets a good portion of those taxes.

On the east coast some of our states have high state income tax AND high property taxes (and property is very expensive) and I’m not sure the services or infrastructure are any better than in states like Texas. At least in California your property tax is locked in, which has its own problems of course.

At least where I live, a good deal of today’s tax revenues go to pensions to people that retired to Florida or Arizona (or some other tax free state) in their 50’s. I think Texas has avoided this trap many states are in today.

Those east cost states just have a lot of debt (including their unfunded deferred compensation such as defined benefit pensions and retiree healthcare), plus debt from old infrastructure that needs to be updated.

By taxing the shit out of my property. I pay more in property tax in Texas than I did in income tax in CA. My property tax doesn't care how employed I am or how much money I'm pulling down either. It's probably going to nullify any appreciation on my home.

Lots of trade-offs.

P.S. Tourism's economic impact on my city in Texas was over 15b BC(before COVID).

There are different ways for states to generate income or save income:

- Personal income/wage tax

- Business income tax

- Capital gains taxes, Dividend taxes

- Sales tax

- Proper tax (homes, cars, etc.)

- Reducing services (e.g., worse schools, worse healthcare)

- Borrow (this can be a slippery slope)

- Create shadow liabilities that dont show up on the books (e.g., pension liabilities with poor growth assumptions)

Texas has a really high property tax.

On a percentage basis, yes. But property values are so much lower that you're likely to come out ahead.

https://howmuch.net/articles/federal-budget-receipts-and-exp...

Texas gets a lot of income from the energy industry (oil and gas). Texas recently changed the law to require a state-wide vote to allow income tax (previously, the state legislature could hypothetically introduce it).

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