Expert: Voters approval of Prop 4 ‘bodes well for economic growth’ in East Texas

Expert: Voters approval of Prop 4 ‘bodes well for economic growth’ in East Texas
(Source: WPTV)

TYLER, Texas (KLTV) - An amendment to the state constitution that would make it harder to establish a state income tax received broad support from Texas voters on Tuesday.

Proposition 4 eliminates the possibility of Texas imposing an income tax unless the state changes its constitution again. Supporters sent a clear message with nearly 75-percent of voters approving the proposition, keeping Texas a business-friendly environment.

“It’s always been an advantage for Texas, you know,” said Tom Mullins, president/CEO of the Tyler Economic Development Council and Tyler Area Chamber of Commerce. “I think there are 5 or 6 other states nationwide that don’t have an income tax. And it really gives professionals, particularly, an advantage moving [to Texas] from states where they have that tax. It can be anywhere from a 5 to 10-percent raise.

“It’s an attraction for talent, and Texas is the most business-friendly state in the country already. So, that combination bodes well for our future economic growth.”

Gov. Greg Abbott declared victory Tuesday night after preliminary results were announced.

“Today’s passage of prop 4 is a victory for taxpayers across the Lone Star State,” Abbott said in statement. “I am grateful to Representative Jeff Leach for his bold leadership on this issue, and for the overwhelming majority of Texans who voted to ensure that our great state will always be free of a state income tax. This ban on such a disastrous tax will keep our economy prosperous, protect taxpayers, and ensure that Texas remains the best state to live, work, and raise a family.”

Texas has never levied a tax on personal income, and overturning Proposition 4 would take a supermajority in both the Texas House and Senate, so it’s unlikely it would ever be reversed.

“People in Texas do not want to pass an income tax, period,” Mullins explained. “It helps the existing population and helps us attract new investment.”

Mullins added that while keeping the option open for a state income tax was never likely to pass, he said it’s important to look to the future of how Texas legislators will offset the cost of services that comes with the state of Texas’ growing population.

Texas grows at a rate of more than 1,000 people per day, according to Texas Demographic Center. Mullins said the cost of services -- like roads, schools, utilities -- will also rise with the population. State legislators will need to examine how to pay for those costs of services if a state income tax is not on the table.

“That’s going to put a big demand on services on the local and state level; we got to pay for that,” Mullins said. “So there’s the challenge: if we’re not going to use an income tax, where do you go?”

In April 2019, Gov. Greg Abbott introduced the idea of raising the state sales tax, which is currently at $0.825, by one cent. The idea didn’t get much traction with Texas lawmakers.

“So that’s the problem, we’ve got the challenge, this rapidly growing state. Part of the problem is we have a competitive tax climate, but at the same time, if it’s growing, there is a demand for services,” Mullins explained. “And you can’t keep shifting that to the local level.

“I haven’t heard any solutions. They’re trying to lower the property tax rates, they don’t want an income tax, and they’re not going to raise the sales tax. So, where do you go?”

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