New York sailed too close to the wind and now Texas has a tremendous opportunity. In a recent study, we analyzed New York’s latest tax increase—and it is a disaster.

The top marginal personal income tax rate in New York City has jumped to over 14.7%, for the highest combined state and local tax rate in the country. We estimate this will cause an additional 120,000 people a year, on average, to leave the state over the next decade. That is over a million people who are going to leave New York and take their money with them. But where will they go?

Texas has been welcoming people from out of state (including one of us) at a rapid rate. Many are coming here to flee high taxes, like those in New York. Texas offers no personal income tax, a sensible regulatory climate, and relatively less government spending, all of which contributes to a lower cost of living—keys to the success of the Texas Model.

In fact, Texas’s success featured prominently in the study, contrasting its robust growth with the anemic losses of New York. To quote from our work: “Texas passed New York 20 years ago, left it in the dust, and has not looked back since.”

In just the last decade, Texas’s population has grown by more than 4 million. No other state even came close to that number—Florida was a distant second with 2.8 million. And over the last 60 years, New York has hemorrhaged 20 seats in Congress, while Texas gained 19. Even more people will likely flee the Empire State in the decade to come.

Texas now has a prodigious opportunity to welcome hundreds of thousands of more people and jobs, and billions of dollars, into the state. A responsible government with low tax-and-spend policies attracts more people than the improvident government of New York. Texas’s veracious fiscal discipline has been attracting people for decades and has created an economic rocket sled on rails.

But one thing stands to derail this freight train of prosperity: Texas’s property taxes are going sky-high.

According to the Tax Foundation’s analysis of 2018 data, Texas had the seventh highest mean effective property tax rate—calculated by the dividing the total real estate taxes paid by total home value on owner-occupied housing—in the country. Attom Data Solutions examined more recent data from 2020 and the results were not good; Texas now has the third highest average property tax rate, behind only Illinois and New Jersey, though this rate would also need to account for home values.

Those high property tax rates not only severely burden Texans, but they also disincentivize people from moving to Texas, which means slower growth, less income for the state, and fewer jobs.

Moreover, property taxes are a very economically inefficient method of collecting revenue because they excessively alter people’s behavior, are unequitable, and fall more heavily on lower-income families—especially during recessions. Even after paying off your mortgage, you will forever owe property taxes whilst you own your home, unlike a sales tax. And, contrary to popular belief, renters pay property taxes as well—the tax is just hidden in their monthly rent—and all of us pay for them through higher prices, lower wages, and fewer jobs available.

A judicious start in addressing this problem is a proposal by TPPF Chief Economist Vance Ginn to eliminate the school M&O property taxes—accounting for half of all Texas property taxes—and replace the lost revenue with a broad-base sales tax. That would lower the overall tax burden while simultaneously maintaining funding for schools under a more equitable tax structure.

Long-term solutions for how to best fund schools must address questions like whether to subsidize the consumers (families), suppliers (schools), or neither. That debate is too voluminous to conduct here but let us assume for a moment that all we can immediately change is precisely how schools are funded.

Replacing property taxes with broad-base sales taxes results in a better tax system that is less burdensome overall, more equitable, more visible to the taxpayer, and is actually preferred by people. Coupled with growth limits on government spending, these reforms would put Texas on a better trajectory and serve as a model for the nation.

Texas badly needs to move away from burdensome property taxes if its blistering pace of economic growth and prosperity are to continue. Allowing property taxes to grow unchecked will derail the economic engine that is the Lone Star State. The last thing Texans want is to take a page out of New York’s failed playbook and put the brakes on this train.