According to the 2020 census, the state of California lost 912,038 residents over the period from 2010 to 2019, meaning the Golden State will lose a congressional seat for the first time in its history.
Texas, on the other hand, saw its population boom over the same time frame, growing by 4 million residents, which means the Lone Star State will be gaining three new congressional states.
Why are residents leaving California while millions flock to Texas? If you listen to Texas Republicans and right-wing economists, the reason is simple: Texas has a low tax rate (including no state income tax at all), which draws investment and people to settle in the state.
But are middle-class Texans actually paying less than their counterparts in California? No. They aren’t, according to a fascinating article from Bloomberg written by Justin Fox, who reports that only the rich are paying less in Texas. All other taxpayers pay more than they would in California:
“It’s awfully hard to argue that taxes have been the main thing driving the California exodus, given that (1) it has been concentrated among the less affluent, (2) their No. 1 destination has been Texas, according to 2010-2018 Internal Revenue Service data that I tallied up early last year and (3) lower-income and middle-income people face higher effective tax rates in Texas than in California.”
Specifically, the overall tax rate on middle-class workers in California is 8.9 percent. In Texas, a middle-class family faces a tax burden of 9.4 percent. That’s a big difference, especially if a worker is already struggling to stay afloat in uncertain economic times such as the one we’re facing in the aftermath of the COVID-19 pandemic.
But the rich are making out like bandits in Texas, where they face a miniscule 3.1 percent tax rate. In California, the wealthy pay 12.4 percent. Clearly, it pays to have money in the Lone Star State because you can keep most of what you have and pay incredibly low taxes on it.
Texas has so many additional taxes that its burden is actually higher than California’s for middle-class people.
— Matthew Sheffield (@mattsheffield) May 23, 2021
The rich are getting richer and the rest of us are falling behind. The data proves that, especially when it comes to taxes. So the next time a conservative commentator brags about how low taxes are good for the economy, keep in mind that’s only true if you’ve already made a fortune.
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