3_texas_tax_chapter - Chapter 3: Texas Tax System:...

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1 Chapter 3: Texas Tax System: Inadequate and Inequitable A good tax system should distribute tax burden equitably and grow to meet increasing needs. A balance among different sources of revenue should be achieved so that the shortcomings of any single tax can be offset by the strengths of another. 1 These two principles are among the nine criteria from the report and model listed in the table Criteria For Evaluating The Texas State And Local Tax System, devised by the Bipartisan Select Committee on Tax Equity, in 1989. 2 Criteria For Evaluating The Texas State And Local Tax System A DEQUACY : Should produce the necessary revenue. E QUITY : The state and local tax burden should be distributed fairly. Everyone pays their share according to ability to pay. E FFICIENCY : The tax system should not unnecessarily or unintentionally interfere with private economic decisions. E CONOMIC C OMPETITIVENESS : To the extent possible, the tax system should be designed to enhance state and local economic development. S TABILITY : The tax system should be able to withstand shifts in the economy and promote certainty, or consistency, for taxpayers and government. S IMPLICITY : The tax system should be simple enough to require minimal compliance and enforcement costs. B ALANCE : Government should avoid over-reliance on any one tax or set of taxes. The tax system should be balanced among a number of taxes. B ROAD B ASE : There should be an even-handed treatment of all tax payers so as to keep tax rates low. I NTERGOVERNMENTAL L INKAGES : Those who make decisions on the tax system should recognize the connections between state and local tax systems. Source: Bipartisan Select Committee on Tax Equity, 1989 According to this model, the Texas tax system needs to change. Our tax system fails the people of Texas in two ways: Texas taxes are not equitable. The current tax system does not provide enough money to meet Texans' basic needs. Taxes are needed to fund essential public services. All of us want to provide the best possible education for our children. We want adequate health care, excellent police and fire protection, well-maintained roads, bridges and sewers, ample libraries, parks, and a safety net of
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2 aid to the needy. We want our community to be a hospitable place for businesses to grow and prosper. As the chart below Does Texas Spend Too Much? shows, when Texas is 50 th in the nation in per capita general state government expenditures, however, we are not able to provide the services that our communities need. Does Texas Spend Too Much? Does Texas Spend Too Much? Per Capita General Expenditures New York $6,891.93 3 Massachusetts 5,994.31 7 California 5,686.48 10 New Jersey 5,348.98 15 Washington 5,237.64 16 Michigan 5,214.23 18 Ohio 5,141.87 20 Pennsylvania 4,627.54 26 North Carolina 4,338.47 33 Illinois 4,203.05 36 Indiana 4,074.73 39 Virginia 4,059.62 40 Georgia 3,834.58 44 Florida 3,448.00 49 Texas 3,441.53 50 SOURCE: U.S Bureau of the Census, Government Division, January 2006.
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This note was uploaded on 11/02/2011 for the course ACCOUNTING ACC511 taught by Professor Awe during the Spring '11 term at Prince George's Community College, Largo.

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3_texas_tax_chapter - Chapter 3: Texas Tax System:...

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