Texas enjoyed an 8 percent revenue growth in the first half of 2014, which is almost double the national average. While growth is good for the state, it also puts resource requirements on state funded programs such as health and education. According to a senior economist with the Dallas Fed, those resource requirements may put the onus on state lawmakers to make tax law changes for funding purposes.
Currently, the state sales tax does the heavy lifting when it comes to state tax revenue. Sales tax accounts for 54.3 percent of taxes collected at the state level. One reason for this is a fairly light regulatory and tax environment in the state. While low regulation and taxation is one reason the Texas economy has grown so much, experts point out that the system of growth without state revenue increases may not hold up long-term.
Experts point out several challenges to the state tax structure, including the rise in Internet shopping and issues collecting online sales tax. There is speculation that the state’s relatively high sales tax may cause shoppers to buy online from other states.
Texas opted out of the federal Medicaid expansion act that was covered under the Affordable Care Act. That leaves around 1.2 million individuals unable to receive the coverage offered by the ACA, and puts some financial responsibility for that care on the state. A growing population and employer demands also puts a heavier burden on education funding.
Though no action has been taken yet, experts look to see tax lawchanges in the future. Even if no state tax laws change in major ways, it’s important for individuals and businesses to stay aware of tax laws and legal issues associated with tax returns and payments.
Source: The Dallas Morning News, “Dallas Fed report: Texas lawmakers may face increasing tax funding decisions to maintain growth pace” Sheryl Jean, Sep. 09, 2014