View Full Version : The Texas Tax System



okcpulse
11-17-2004, 11:59 PM
Before moving, I made sure to do research in order to familiarize myself with Texas. Everything from motor vehicle registration to jobs, liquor laws and taxes. For years I've heard the proverb of the great Texas tax system. There for a while, Oklahoma lawmakers were debating adopting the Texas tax system in its entirety. I was all for it. However, after down my homework, I'm not so sure it's that much better. The most attractive aspect of living in Texas is that I don't have to file for taxes twice... once for the feds and another for state. I always believed that registration was cheaper in the Lone Star state, but I may have been mistaken.

In Texas, they have a higher state sales tax... at 6.25% compared to Oklahoma's 4.5%. Local and/or county sales taxes in Texas total 2% but have a cap, therefore no community in Texas pays a sales tax higher than 8.25%, yet no community pays less than 6.25%, but that's if a municipality has no sales tax period. Oklahoma has no such cap, so local sales taxes are as high as 5%, with residents paying 9.5%, OK state sales tax included. Oklahoma City's is 8.375% compared to Houston's 8.25%. Yes, groceries are exempt from sales tax, however that only applies to food necessities, not sodas, frozen entrees, cakes or hot foods from the deli. I should know, I checked the receipt after shopping at Kroger.

On the contrary, property taxes in Texas are limitless, where a resident pays at the state, county and local level. The largest collection is at the local level, which is where independent school districts receives much of its funding, and that leads to very uneven public school funding, which results in very well funded or poorly funded school districts, depending on where you live. There is no constitutional cap on property taxes in Texas, so the homeowner must be aware.

Oklahoma joined the union as a state not long after property began being taxed, so disgruntled agricultural families moved to Oklahoma during the land run to avoid such taxes, and kept this in mind in 1907 when the state constitution was written. Heavy restrictions were placed on property tax collections, and today those limitations have strengthened. Hey, I'm not complaining. After all, it takes a 60% super-majority to pass a property tax bond issue in Oklahoma. In Texas, it is a 50% simple-majority. Plus, we have a cap on how much can be levied.

In Texas, motor vehicle registration is $68.80 a year, regardless of age. Vehicles are levied the state sales tax at the time of purchase, so you're paying 6.25% of the sales price on a vehicle purchase in Texas. Vehicle inspections are $25 to $40 depending on which county you live in, and an emissions test is mandatory (I can understand why).

In Oklahoma, motor vehicle registration is anywhere from $23.50 to $93.50 depending on age. Oklahoma does not levy a sales tax on vehicle purchases, but instead levies a 3.25% excise tax on the purchase price. And, no inspections are required.

Oklahoma does, however, need to be on par with Texas and most other states when it comes to dealing with fuel taxes, which in Texas are higher. We need more funding for our roads. Up until recently, tobacco taxes in Texas were higher.

I see pros and cons between our tax systems. So there is little room for debate. I, for one, do not look forward to paying for a $25 vehicle inspection for each car, my car and my wife's. We own older vehicles, so our registration will surely go up. However, hundreds of dollars will be saved on state income tax with-holdings, only to go on other taxes in Texas, namely property.

Patrick
11-18-2004, 12:21 AM
Hey okcpulse, thanks for the explanation of the differences between the two tax codes. I find it quite interesting.

I have heard horror stories about property taxes in Texas.

Hey, the way I look at it...the state has to get their money somewhere....whether that's through income taxes or property taxes or sales taxes, I've never really seen the difference. I guess thelack of an income tax does make it easier on employers, but it makes it more difficult on property owners!

I'm glad our state axed yearly car inspections. Most car shops were just passing the cars without really inspecting them anyways. The state just wasn't allowing them to be fairly compensated for their time.

One thing I wish we'd adopt in Oklahoma is "No Fault Insurance". When my brother lived in Florida he loved it.....that way you never had to worry about auto insurance law suits. But, I suppose one problem with it....it doesn't punish those that are at fault.

Keith
11-18-2004, 05:44 AM
I'm also glad that they did away with the yearly auto inspections, mainly because, when you go to a business that is authorized to do inspections, they act like you are bothering them, especially if all you wanted was an inspection.

Plus, I remember when I would get my inspection done, it seemed like they always found something wrong with my windshield wipers or something else that was rather petty, and then refuse to let it pass inspection.

The downside to inspections is that many drivers are now driving cars that are unsafe; bald tires, cracked windshields on the driver's side, non working signal lights(if they even use them), and no brake lights :eek: .

I can't imagine living in Texas and having to pay $25.00 for an inspection.

mranderson
11-18-2004, 06:01 AM
The inspection price must have really gone sky high over the years.

When I was in Texas, it was in line with Oklahoma.

We need to stop saying Texas plans are better on everything. Why? Easy. Other states have no income tax and are doing MUCH better. Example. Wyoming has no income tax and has roads and other things that far outshine both Oklahoma and Texas... And their population of the ENTIRE STATE is smaller than Oklahoma City proper. They have consumer taxes and such and some other things, but no income tax, no corproate tax, no inheritance tax. Nothing of the kind. I do not know everything about their system, however, it is better.

How do I know? I must trust my parents on this one. They lived there for a year and still have investment property there. My mom said the property tax, in her opinion, was reasonable. And prices including taxes on consumer goods was reasonable.

We need to investigate these other states. Yes. Maybe Texas might have something good. However, Wyoming might, then Florida, Tennessee, etc. Take the ideas that are best from all the no income tax states and put those into a package, then vote on it.

Just because Texas has something, or in the case of income tax, does NOT have something, does not mean Oklahoma has to automatically think it is best. There are 48 other states besides Oklahoma and Texas. Just maybe one of those other states has a better idea.

By the way. I do not know much about their tax laws, however, Arkansas has some of the best interstate freeways I have ever been on.. And I have been on well over half of the interstate system in this country. I think, however, that is the Billary factor.

Point is simple. STOP SAYING TEXAS IS BETTER IN EVERYTHING! It may not be.

Midtowner
11-18-2004, 08:34 AM
Why do we have to change the tax system? Almost everyone that says we need to change it says we need more money for x or more money for y. I don't personally think I should have to pay more taxes (that's what it all translates to, doesn't it?).

Let's attack the problem from the other side... cut spending.

Roads? I'm sorry, we don't need 4-lane highways out in Pushmataha County. Look at the state of Oklahoma and look where there are 4-lane interstate style highways and try to convince me that it's not wasteful spending.

How about all of these trips to China? Highly necessary. How about privatizing state agencies -- or at least partially privatizing them and subsidizing if it would be impossible for them to make a profit in their current form.

How about school district consolidation?

It makes me angry every time I think about how wasteful our government is with our money. Then they have the nerve to say they need more. Sorry! If it's broken, FIX IT. Do you think if we increase our taxes that they'll just pay on current shortfalls and not expand their operations and soak up more money?

The entire system is broken when a state agency tries and tries at the end of the year to spend every penny allocated to them to prove that they need more money. We have a system that rewards spending! Why not a system that rewards saving?

There are some things on the spending side of government that are fundamentally wrong. Until there is some real progress in the capitol towards fixing some of those issues, I hope the people of Oklahoma do not vote another cent into the state coffers.

okcpulse
11-18-2004, 10:11 AM
With all due respect, Arkansas puts alot into their interstates, and very little into two-lane highways. My dad and late stepmother lived in NW Arkansas for 7 years. They paid property tax on their vehicles, most of which went to highways.

If Oklahoma should take a lesson on highway maintenance, it should look to Kansas. They are one of the top five states for good highways, both interstate and non-interstate. However, Kansas pays property tax on cars, as well.

Patrick
11-18-2004, 11:17 AM
Midtowner, I think you hit the nail on the head. Changing our tax code would only increase taxes, only it would allow the state to do it under the cover of a "new" tax system. Truth is, the main benefit of a new tax system would be for improvements in our state's services, and of course, under the present spending scenario, that requires increasing taxes.

WE NEED TO REDUCE SPENDING! I put that in al caps because no one seems to be understanding that. Our federal government is the worst. The GOP in the US congress voted jsut yesterday to increase the caps on federal debt to $800 mill a year?? What are they thinking? Instead of increasing the amount the feds can borrow, why don't we go the opposite direction and cap spending, maybe even a balanced budget amendment.

What in the world has happened with these so-called fiscal conservatives. I find it quite hilarious that it's now the Republicans in Congress who are the big spenders, and it's the Democrats who are trying to limit spending and balance the budget. Huh? Since when did the Democrats become the conservative party and the Republicans the liberal party? Truth is, it's happened. And you have to remember...this is the same Republican party that tried to pass a balanced budget amendment about 10 years ago under Newt Gingrich. The GOP Party of Newt Gingrich's days was a lot more intelligent than the Republican party of today. The GOP party of today has outright reversed their once conservative spending policies. I find that unbelieveable and completely irresponsible. Just as irresponsible as the Democrats were back in the 80's for big spending.

Anyways, I know this pertained to state spending and taxes, but I jsut wanted to throw that in there. Truth is, we need to focus on cutting spending, and not on increasing taxes. At least we do have a balanced budget amendment in this state. It works well. If we only had one at the federal level.