Who Pays Taxes in Texas?

Brakeyshia Samms, State Policy Fellow

Last week’s release of the 2015 Tax Exemption and Tax Incidence report by the Comptroller’s office is great reminder that Texas tax system is in dire need of a little spring-cleaning. The report reveals the unfairness of our tax system, since low-and moderate-income Texas households bear a disproportionate share of state and local taxes. The unfairness of our tax system sounds all too familiar.

As shown in the graph below, households with income less than $34,161 pay almost four times as much in taxes as a percentage of income, than households with income over $147,411. Which means that the Texas households that are least able to afford it pay more in taxes as a percentage of their income, than the Texas households that could easily afford to pay more.

Who Pays Texas

Despite the overall unfairness of our tax system, the unfairness of different taxes varies significantly. That’s why the Suits Index, which measures the fairness of a tax system by mathematically comparing the percentage of taxes paid and the percentage of total income received for each taxpayer, is a fitting measure to compare the unfairness (or regressivity) of individual taxes. As shown in the table below, the oil production tax is actually the fairest tax paid by Texans; whereas, the cigarette tax is the least fair. The table also shows that the sales tax, which accounts for over half of all state tax revenue, happens to be one of the most unfair taxes as well.

TaxSuits Index (Least unfair to most unfair)
Oil Production Tax-0.052
Natural Gas-0.076
Franchise Tax-0.08
School Property Tax-0.084
Motor Vehicle Sales Tax-0.202
Sales Tax-0.254
Gasoline Tax-0.261
Insurance Premiums-0.316
Cigarette Tax-0.442

Bottom-line, this report reveals that Texas households with the ability to pay more in taxes as a percentage of their income do not pay more – making our tax system exceedingly unfair and inadequate.

More detailed analysis is available in our policy paper.


At the Center for Public Policy Priorities, we believe in a Texas that offers everyone the chance to compete and succeed in life. We envision a Texas where everyone is healthy, well-educated, and financially secure. We want the best Texas - a proud state that sets the bar nationally by expanding opportunity for all. CPPP is an independent public policy organization that uses data and analysis to advocate for solutions that enable Texans of all backgrounds to reach their full potential. We dare Texas to be the best state for hard-working people and their families.


  • What’s so interesting is that there has been so little change in the regressivity of Texas taxes since the initial tax incidence study in 1979, https://dl.dropboxusercontent.com/u/59765047/Bullock%20Tax%20Incidence%201979.pdf

    Stuart Greenfield 01.04.2015
  • If you want a fair tax for all Texans then up the taxes on goods and services that everyone has to pay. It unfair to make the land owners pay for all (large and small). We have bills too. We get no government assistance no do we have enough money to be independently wealthy. If Texas does not guard its middle class then we will be like other country’s who have a very rich and a very poor. We will then be in great danger of losing our freedom

    Abbie Hanke 16.04.2015

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