The COVID-19 pandemic and government response caused a sharp economic downturn and massive unemployment. Going forward, tax policy should be carefully weighed on how to efficiently raise revenues with the least adverse effect on economic recovery in Texas.
- Taxation exists on three planes: what you earn, what you own, and what you buy. Corporate taxation is often treated differently within each of these categories.
- Taxes are necessary to fund government activity, but they can distort economic behavior.
- Raising taxes in a recession is especially problematic because households already have less income, business revenues are lower, and employment opportunities are restricted.