Earlier this week, the Tax Foundation released its 2009 State Business Tax Climate Index, “a tool for lawmakers, the media and individuals alike to gauge how their states’ tax systems compare.” And thanks in large part to Texas’ pro-growth, low tax environment, the Lone Star State’s tax system received another favorable review.
Texas improved from eighth to seventh in this year’s index. Texas’ ranking is important because states with friendlier tax climates typically attract more capital and labor than states with high tax burdens. As a result of increased levels of capital and labor, a state and its residents benefit from lower unemployment, higher employee wages and benefits, increased investment, and better overall economic growth.
Among the many reasons cited for Texas’ high ranking and overall success are its lack of a state personal income tax and a relatively simple, well-structured unemployment insurance tax.
However, the Tax Foundation’s analysis isn’t all good news. A major weakness of our tax system is high corporate taxes paid through the margins tax. In fact, Texas’ one percent gross receipts tax on corporations is the highest such levy in the nation.
Texans have much to be proud of. Our state’s smart fiscal policies have led to phenomenal economic prosperity and growth. Keeping our state committed to the principles of low taxes and limited government will allow us to stay on this track.
– James Quintero