Tax News

Texas Voters Amend Constitution to Permanently Ban Personal Income Taxes

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Author: How Money Walks

Date: November 12th, 2019

In 1993, the voters of Texas enacted a Constitutional Amendment requiring voter approval before any statewide income tax could take effect. Now in the year 2019, Texans have strengthened their commitment to economic growth further by passing Prop 4, which enacts a total ban on individual income taxes. While Texas does not currently have an income tax, the practical effect of this amendment is to increase the legislative vote requirement prior to any income tax authorization (2/3rds majority vote in each chamber followed by a simple majority vote of the people).

According to the latest available IRS data on the How Money Walks website, Texas has been a popular destination for income traveling from higher-income states. The state has seen nearly $47 billion in adjusted gross income flow into its borders between 1992 and 2016. Nearly 40% of this total comes from just four states, all of which are known for their high-tax environments – California, New York, New Jersey, and Illinois.

The sponsor of HJR 38, which became Prop 4 after passing each chamber of the Texas legislature with a 2/3rds majority vote, was Rep. Jeff Leach (R-Plano). He wrote in a Dallas Morning News opinion piece that “businesses are leaving high-tax states in droves, relocating to Texas with their high-paying jobs and endless possibilities for growth. Why? For many reasons, but namely because Texas has predictable and fair regulations, a competitive housing market, strong public schools and no state income tax.” Indeed, the data shows that Texas has been the second most popular destination for American taxpayers to move to, with a net migration total of 902,952 between 1985 and 2016.

Texas is known as much for its policies of low-regulation and low-taxes as they are BBQ and high temperatures. By passing Prop 4, taxpayers in the state are doing their best to ensure the Texas economy remains competitive for years to come.


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