Government Final Project

(Papers should be submitted to the D2L Dropbox – located under ‘Course Activities’)

In at least four (4) full, type-written pages, please answer the following: (Resources are additional)

The state of Texas has a reputation for being a “low service, low tax” state. In fact, Texas prides itself on levying no state income tax on individuals or businesses. While Texas certainly provides a favorable environment for business, its tax system is often criticized for being too regressive. Evaluate the pros and cons of having no state income taxes. Should the Lone Star State start taxing incomes or continue business as usual?

While answering this question you should discuss the following:

1) What are the major sources of state revenue in Texas?

2) What are regressive taxes? And, are regressive taxes a fair way for the state to generate revenue?

How does this contrast with a progressive taxation structure?

3) Who are the winners and losers of the way Texas generates revenue?

Note: When thinking about this question you should assume that states that feature no income taxes must resort to more regressive taxes to generate revenue. Hence, having a state income tax implies fewer or less regressive taxes. That is, you can assume that if Texas introduced a state income tax, that would decrease the regressive taxes it levies on its residents.