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Comment by encoderer | Hacker News Reader

Another benefit to Austin: No state income tax.

My understanding, at least in the case of Texas, is that the lack of a state income tax is largely offset by significantly higher property taxes.

On average an individual's tax burden will still end up being less in Texas.

My guess would be that most people working at a start up would be renting and thus would avoid the property tax.

Well, obviously renting doesn't "avoid" property tax -- the owner just passes the cost of the tax on to the renters. That said, the cost of housing in Austin is probably still considerably less than, say, the Bay Area or NYC.

That's how it should be. That's actually a progressive way of doing things. People who can afford pay higher taxes do.

Property taxes actually wind up being regressive a lot of the time. Having 2x or 10x income usually translates to a house that's less than 2x or 10x in value.

That's not necessarily regressive, if a billionaire buys the same house someone making $70,000/yr doesn't make it regressive. It's not linearly progressive (ie 1:1 ratio of taxes to taxable amount), but is still progressive. Current income taxes (federal at least) are more regressive even though quantity of money might still be higher for higher income individuals.

I could be completely wrong, tax stuff confuse the hell out of me...

If the ratio of taxes to income isn't rising with income or at least keeping constant (which is what I think you're referring to as "linear"), your marginal tax rate is declining as income rises. I think you maybe mean it's staying constant with consumption, but that's kind of the problem - people with higher incomes tend to consume a smaller portion of their overall income, so taxes based on consumption are usually regressive.

That's pretty much the definition of regressive when it comes to taxes - people making more are being taxed less, proportionally.

http://en.wikipedia.org/wiki/Regressive_tax

While you're partially right in terms of house property value, high property taxes encourage efficient use of land. They prevent wealthy landowners from just sitting on valuable land.

One other thing I forgot to mention is that the ultra-wealthy typically earn most of their money from investments, not income. This is why Mitt Romney pays a net lower tax rate than you or I and another reason why even progressive income taxes are fairly regressive.

State taxes often treat investment and wage income the same; particularly in California.

Formerly 15% + 0% (if you lived in WA) capital gains one year is now 20% + 3.8% + 14.3% (if you moved to California in 2013). That's a pretty big difference for the same gain.

"Land Value Taxes" are the solution to this. Taxes on the unimproved value of land, deterring people from holding huge amounts of land idly. Provide a way to donate land to environmental trust if you want it to be empty, or give rebates for certain pro-civic activities (i.e. a 100 year no-build promise on your land would reduce your taxes substantially)

How, exactly, do, real estate taxes (flat ad valorem, right?) do that better than progressive taxes on income?

Most state income taxes that I know of are flat.

> Most state income taxes that I know of are flat.

Of 43 states with individual income taxes, 7 have flat individual income taxes. [1]

[1] http://en.wikipedia.org/wiki/State_income_tax

I could see how taxing standard of living rather than a high income could be a good thing.

> I could see how taxing standard of living rather than a high income could be a good thing.

That certainly seems like an argument that could be made, but I don't see that ownership of real property alone is a better proxy for "standard of living" than income is, so I don't see how any such argument would be relevant to the claim made with regard to property taxes. (Consumption -- as is the focus of sales and use taxes -- is probably a better proxy for "standard of living" than real estate ownership is and might be better than income, but I still don't think flat consumption taxes are more progressive against standard of living than progressive income taxes are.)

Actually, it largely offset by just fucking it's citizens out of basic services.

Like what?

What do you mean by basic services? We have roads in Austin, We have a city-owned electric company. We have hospitals. We have police and fire departments. The idea that Texas is some lawless place without services for anyone is just wrong. They might not have full salary pensions for retired government workers (the horror!), but Texas has provided plenty for its citizens.

There are lot of 3rd world countries in which I'd rather be a poor person than Texas.

Your governor believes many (if not most) Federal assistance programs are unconstitutional. He believes in drug testing for the unemployed.

Which ones? My guess is you've never been outside of the US or its satellite allies.

Again, what basic services are not provided? I'm now genuinely curious about what you consider a basic service that is not provided by Texas. Believing in drug testing for the unemployed does not mean that Texas does not provide basic services. What 3rd world countries would you rather be a poor person in?

Yet another reason for living in your van (https://news.ycombinator.com/item?id=5794592)

Higher percentage-wise yes, but not by its affect your paycheck. My property tax is half of what I paid in MA, and it's for a house double the size and half the price - in a suburb of Austin, with a shorter commute to downtown that I had to Boston. My paycheck hasn't suffered in any way to make that trade, either.

No state income tax for Seattle either.

I live in Houston rather than Austin, but I can say that in Houston the lack of state income tax is easily made up for by the extremely high property taxes.

I moved to Austin from Raleigh and got a 7.5% raise because there isn't a state income tax.

However: property taxes are significantly higher here (about $2-3 per $100 value, depending on location.) And you'll pay full sales tax on vehicle purchases (NC has a 3% highway-use tax only).

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