Wouldn’t you like to pay lower taxes?
Well, a recent study by the Mercatus Center shows that Texas could substantially reduce Texans’ tax burden if it cut corporate welfare. The authors of the study used recently released data to show how much each state government burdens people with higher taxes to fund corporate welfare.
Texas is known broadly for having relatively low taxes, spending, and regulations, as the Lone Star State ranks second highest state in economic freedom according to the Fraser Institute, but it can’t rest as other states improve their competitiveness. Specifically, if Texas wants to continue being a beacon of freedom and prosperity, looking at how much corporate welfare costs Texans is a great place to start.
As we have already seen from the federally-passed Tax Cuts and Jobs Act, reducing the tax burden on employers and families supports greater economic prosperity, noted by near record highs in business and consumer confidences along with more robust economic growth than previously projected. Eliminating wasteful subsidies, tax breaks, and other corporate welfare policies from Texas’ tax code would reduce ultimately the tax burden in Texas. While the effects may be more modest than the TCJA, many Texans would benefit from cutting these unnecessary, costly handouts allowing politicians to subjectively pick winners and losers instead of objectively picking them through markets.
The figure below shows the potential tax reductions of eliminating these handouts. Texas could either cut the business franchise tax by 24 percent, cut the sales tax by 3.2 percent, or cut the overall tax burden by 1.7 percent.
Bottom line: Texas should apply the law equally to everyone, and not favor certain employers or individuals, many of whom already make handsome profits. If we want to put Texas on the best path towards human flourishing, eliminating corporate welfare and restraining government spending overall so tax burdens can be lower is a valuable solution.