Texas Should Levy A State Income Tax To Limit The Federal Government

Texas should institute a state income tax. So should Florida and Tennessee, along with all U.S. states that presently don’t have an income tax. Please read on.

This is decidedly NOT a call for more taxes. Taxes are a price, or a penalty placed on work. As opposed to encouraging greater taxation, this opinion piece is instead calling for what red staters should cheer: bringing taxation and government back to the local level, and away from the federal government.

Which means this is a SALT piece, though one written from the perspective of red states, along with incredulity about red staters. They believe in limited government and incentives (wisely), yet they’re eager to get rid of the state and local tax deduction (SALT)? Something’s wrong with this picture.

That’s because government spending saps freedom and economic growth exactly because central planning of precious resources from the Commanding Heights saps freedom and economic growth. Keep taxation and spending inside cities and states as much as possible with the latter in mind.

Except that red staters keep arguing that SALT “rewards high-spending states.” No! Government spending is once again harmful. More realistically, SALT encourages states that want to spend harmfully to localize the errors, all at the expense of a federal government that similarly spends harmfully. Why allow all that wealth creation in California to feed the national government’s ability to damage the broad U.S. economy with central planning?

It raises a question: why are red staters so eager to pay federal taxes? It’s a question that turns the traditional critique of SALT, that it “rewards high-spending states,” on its head. As opposed to rewarding high-spending states, SALT encourages cities and states to take back control of taxing and spending, all at the expense of the federal government.

If the SALT deduction were unlimited, or better yet, a credit, the incentive would be for cities and states to provide the governance people want so that states can avoid the governance they don’t want from the national government. Which means SALT is about choice. Encourage cities and states to be laboratories of ideas, all at the expense of the federal government’s desire to create national laboratories.

Which is very much a “red state” point of view. Red staters broadly believe government at all levels is problematic and wasteful, but that it’s much easier to limit the wasteful, economy-sapping burden of government if most of the taxation takes place in cities and states. Let’s encourage just that.

Seriously, how odd that Texans, Floridians, Tennesseans (among others) revel in the fact that none have a state income tax. Why would they? Isn’t the point that Texans, Floridians and Tennesseans disdain big government, and by extension, would like to control it more? If so, why the desire for a tax code that creates an incentive for all states to scrap local taxes since they’re no longer deductible against the federal bill?

Never forget that the Constitution was written not to limit our rights, but to limit the rights of the federal government. Within the document there was the 10^th amendment, which “reserves powers not delegated to the federal government, nor prohibited to the states, to the states or the people.” Precisely.

States were supposed to be largely autonomous in a taxes and spending sense so that people could choose the governance that most suited their needs. A lack of SALT encourages all states to follow the lead of Texas et al whereby most taxes are paid federally. That’s the incentive. Unknown is why red staters support this taxation incentive.