What Fox Doesn't Want You To Know About Texas Taxes

Fox & Friends hosted former California Republican Senatorial candidate Chuck DeVore this morning to hype discuss his book promoting Texas' zero income taxes and corporate taxes as a model for the rest of us. In case you were wondering, DeVore has left California and is now Vice President of Communications for the Texas Public Policy Foundation, a Koch-funded institution dedicated to “educating and affecting policy makers” among other goals. But he was merely introduced as an author. If you blinked during the brief period that Fox fessed up to his current job title (without pointing out the Koch connection), you might never know. Also not discussed? How Texas' no-income-tax policy likely means higher taxes overall for most of us.

DeVore couldn't seem to say enough bad things about the state he hoped to represent in the U.S. Senate just a few years ago. Host Clayton Morris, who talked about having family there, joined suit. Morris started with the Freudian slip of saying that the “burdensome tax rate in that country.... is a major problem.” He also complained about the “burdensome regulations” his father-in-law faces running a “large landscape business” there. He said he has other family members in California who “want to move their business out of that state.” He didn't say anything about anyone planning to do so, however.

After some more California bashing, Morris said, “I want to know what is Texas doing right that California is not.” He put up a graphic with Texas' supposedly favorable poverty and unemployment rates and noted that it has zero income taxes compared to California's “highest bracket” of 9.3% and zero corporate taxes compared to California's “flat 8.8%.”

“Remember during the election we were talking about Texas as a model for the nation? What were they doing right?” he “asked.” On cue, DeVore talked up not only the lack of taxes but how the lack of funding for state government supposedly prevented it from ruining everybody's lives through regulations. He claimed that taxes and regulations in California were causing a “massive out migration.”

Not according to Reuters. They cited findings from a September 2012 review of state tax records by the Stanford Center on Poverty and Inequality:

In fact, more millionaires came to the state than left after California's so-called Millionaire's Tax was introduced in 2005 - adding 1 percentage point of tax to incomes over $1 million. A 1996 cut to taxes for those earning $110,000 and up did not spur migration into the state, either.

The number of millionaires has risen or fallen by about 10,000 a year, but that change has been almost entirely due to the state economy, not wealthy people coming into or leaving the state. Such migration accounted for about 47 people, net, on average.

The very richest, who were likely to have houses and properties in many parts of the world with creative means to finesse their taxes, were the least likely to move after the tax hike, but even those at the bottom end of the millionaires scale did not pick up and leave, according to the September study.

These findings matched behavior in New Jersey after it raised its top rates, it was noted.

Meanwhile, there's plenty not to love about Texas' taxes. In 2011, when Rick Perry was talking up Texas economics as part of his bid for the presidency, the Texas Star-Telegram took the kind of look behind the numbers that “fair and balanced” Fox & Friends didn't:

What draws less attention is that sales, property and wireless service taxes are higher in Texas than in most other states.

...At the state level, Texas draws most of its revenue from federal funding and sales taxes. At the local level, property taxes play a major role.

...Combining state and local rates, Texas has the 14th-highest sales tax rates in the country and the 22nd-highest property tax rates, according to the Tax Foundation.

…Texas ranks near the top in property taxes as a percentage of home value.

"Once you start adding it all up and writing the check, you see there is no free lunch," (Texas Republican pollster David Hill) said. "Texas is a nice state with medium-to-high taxes."

...Texas has the fifth-most-regressive tax system in the country, according to a 2009 study by the Institute on Taxation & Economic Policy.

But Morris was too busy slobbering over DeVore to go into any of those pesky details. He closed by reiterating the title of DeVore's new book and saying, “Knows what he's talking about”

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