New Report: Income Inequality Especially Bad in Texas
Texas is among the states with the highest income inequality, according to a new report from the Center on Budget and Policy Priorities. Texas ranks 10th in the country, with its richest residents— the top five percent of households— having average incomes 15 times as large as the bottom 20 percent of households and five times as large as the middle 20 percent of households. The top five percent of Texas households receive 20 percent of the state’s income, even without counting capital gains (earnings from stocks and other investments).
The report also shows that the concentration of income among the wealthiest residents is striking in every state – reflecting three and a half decades of unequal income growth.
Income gains in the American economy over the last 30 years have gone largely to the richest households, while many middle and lower-income Americans haven’t shared in the nation’s growing prosperity. This has reduced opportunities for Texas families striving to get ahead and weakened our overall economy.
The good news is that there are ways Texas can use state tax policies to begin to reduce inequality:
- Eliminate costly, outmoded or ineffective tax breaks
- Broaden the sales tax base to include more services consumed by high-income Texans — such as investment counseling or country club memberships.
Most importantly, Texas must maintain an overall state and local tax system that raises sufficient revenue to pay for the building blocks of shared prosperity. Cutting state tax rates or capping the ability of local governments to generate necessary funds would reduce the services on which all Texans rely.