Taxes

The Truth About Taxes and Regulation in Texas

Texas may be better than most states, but a libertarian utopia, it isn't.

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At least two books I've read recently have portrayed Texas as a kind of free-market paradise. Alas, it isn't so.

Rick Perry had a reason to sing his state's praises: he's the governor. In his 2010 book Fed Up!, he wrote, "We know that the route to success is lower taxes, smaller government, and freedom for every individual, because we have seen it work." He said that Texas is leading the nation "by remaining committed to the idea that Americans prosper when left free from government interference."

The Harvard economist Edward Glaeser also pointed to the fast growth of Houston and Dallas in his 2011 book Triumph of the City, crediting affordable home prices created by the lack of regulatory barriers to new home construction.

It may indeed be the case that Texas is doing better than the rest of America because it has lower taxes and smaller government. But I was there for a quick trip this past weekend, and let me tell you, a libertarian utopia, it isn't.

The pain started when I checked out of my hotel at the Dallas/Fort Worth International Airport. The City Occupancy Tax on the room was 6%, and the state Occupancy Tax was another 6%. I wound up paying $18.26 just in taxes for one night in a hotel room. I had checked in around midnight and checked out around 8 a.m., so the taxes alone worked out to nearly $2 an hour.

The elevator I took down to the rental car shuttle displayed a sign: "This elevator is regulated by the Texas Department of Licensing and Regulation 1-800-803-9202 Certificates of Compliance are located at DFW Airport Operation Center 972-973-3112." Only a bureaucrat could imagine that a traveler would want to telephone to check on an elevator's state-issued certificate of compliance before stepping on for a ride. My mind reeled at the cost and time that must have gone into installing the sign into that elevator and heaven knows how many others.

Then to the rental car. The actual rental rate was $18.38 a day. Hertz added on some charges for "vehicle license cost recovery" and "concession fee recovery" that brought it up to $28.07. That was subject to a 15% tax, or $4.22. I only had the car for about four and a half hours, so, again, state and local taxes got me for about a dollar an hour.

Both the hotel occupancy tax and the rental car tax were classic examples of taxation without representation. I don't vote in Texas or in whatever local jurisdiction the hotel or rental car garage were in, so I have no say in electing the representatives that impose those taxes. Texans may be happy they have no state income tax, but visitors are paying the price.

On my brief trip to Dallas I stopped in at one of those Western stores that sells cowboy hats, boots, and belt buckles. Sure enough, dangling along with the price tags from those nice new leather cowboy boots made by the venerable Fort Worth-based cowboy boot maker Justin Boots (now owned by Warren Buffett's Berkshire Hathaway) was nothing other than a Proposition 65 label: "WARNING: This product contains chemicals known to the State of California to cause cancer, birth defects or other reproductive harm."

The Justin Web site explains: "The label does not mean that our products will necessarily cause cancer or reproductive harm. While we believe our products are not harmful when used as designed (that means wear your boots, don't eat or lick them!), we provide the warning as a result of the California law…The penalties for not complying with Proposition 65 are steep. As a result of the steep penalties and because there is no penalty for providing an unnecessary warning, Justin Brands and many other manufacturers have elected to provide the Proposition 65 notice out of an abundance of caution in order to avoid the potential for liability."

It's bad enough that Californians have to live with these silly warnings. But now a Texas company selling cowboy boots to Texans in Texas is going to let itself be bullied into this sort of thing?

When my flight back to New York City landed late at night, there was a line out in the cold rain at the taxi dispatch stand. There were plenty of taxis lined up—the delay came when the dispatcher handed each passenger the government-issued piece of paper explaining the regulations and rates of taxi riding. On an ordinary night I would have had a flicker of annoyance at the way in which the state was slowing my way home. Maybe if we had more politicians in New York who were outspoken advocates of lower taxes and small government, we'd be better off. Or maybe we'd just be something like Texas.

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life. 

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  1. But I was there for a quick trip this past weekend, and let me tell you, a libertarian utopia, it isn’t.

    Who claimed it was?

    1. Rick Perry…In his 2010 book Fed Up!…Harvard economist Edward Glaeser …in his 2011 book Triumph of the City.

      1. I think you may be paraphrasing… and taking a few liberties

        1. Sources cited in the story.

  2. Don’t let those northerners in Dallas ruin the whole state for you.

  3. Let’s inject them bitches with state Gardisil, boys! I got some cash on this fucker!

  4. You could have asked any of us regular posters that are from Texas if it is libertarian utopia. Would have saved you some gas money.

    I’m sorry you live in New York though.

    1. Indeed. But blaming Texas for a company’s putting California’s stupid warning on all their boots seems like a stretch.

      One of the upsides is that the ice cream truck is still welcome around here.

      1. All companies that sell nationwide have CA warnings. The factory doesn’t know where the products will wind up. Thanks for helping pay for all of those “tax payer” funded stadiums in DFW, that is where some of the hotel taxes go.

        1. He should have come to Houston and helped pay for the soccer stadium.

          Which reminds me, can somebody kill Harris County-Houston Sports Authority with fire? Thx.

          1. Still bullshit use of taxpayer money but the soccer stadium was a bargain compared to the other stadiums and the owners actually chipped in. All the new found opponents of spending taxpayer on stadiums just because it is soccer can go suck a dick.

            1. Oh, I was against spending money on stadiums long before they planned on building a soccer stadium. I didn’t want Reliant or the Toyota Center, either. I just want HCHSA to die so we don’t keep getting more fucking stadiums. It’s the only way HCHSA justifies their existence: build another stadium.

              1. Wasn’t trying to accuse you. Whenever you read a Chron article about it there is an avalanche of assholes who oppose this stadium in particular.

              2. Ha, like you’re really going to complain when they build that spiffy new tractor-pull arena.

          2. Then nuke the whole thing, bury it in consecrated soil, and sow it with salt. And then kill it again. With a stake through its heart. And garlic. And that stake? Make it a unicorn horn. No, two of them, from identical twin unicorns, just to be on the safe side.
            And make sure there are armed guards on duty for when it rises. I mean REAL guards, not mall ninjas. Import a buttload of Ghurkas.

          3. And a stake through the heart. Covered with garlic. And a standing guard of Ghurkas to put it down again. That’s a start, at least.

          4. Killing the HCHSA will be easy. The bonds they helped issue and underwrite? Not so much.

            Aren’t we still paying for the Astrodome renovations to try and keep Bud Adams here?

      2. Exactly. We might not be libertopia, but (for the time being at least) we are miles ahead of CA or NY.

        1. You have Rick Perry as your governor. No way you can claim you’re ‘miles’ ahead of anyone!

          1. Damn straight!

          2. The Governor of Texas is a fucking figurehead. The current occupant is horrible, no doubt about that. But yeah, we are miles ahead of the dumbfuckery that comes out of California and Bloomberg’s Big Apple.

            1. +1000

            2. The current occupant is horrible, no doubt about that. But yeah, we are miles ahead of the dumbfuckery that comes out of California and Bloomberg’s Big Apple.

              It doesn’t matter how dumb your governor is so long as he doesn’t do jack shit; kinda makes me prefer a dumber leader of the executive branch.

        2. Sure you are, DesigNate. Just like Germany was miles ahead with Stalin.

        3. Exactly. We might not be libertopia, but (for the time being at least) we are miles ahead of CA or NY.

          I’d be willing to wager that NY gives China a run for its money.

  5. You misspelled Taxes as Texas.

    1. I have an uncle who lives in Dollars.

      1. Props for the Duck Soup reference!

  6. It’s bad enough that Californians have to live with these silly warnings. But now a Texas company selling cowboy boots to Texans in Texas is going to let itself be bullied into this sort of thing?

    It would be more costly for them to keep two inventories, one for the scum of the earth and another for Texans.

    1. It would be more costly for them to keep two inventories, one for the scum of the earth and another for Texans.

      Not id the only put the stickers on the outside box only once shipped.

  7. What a pointless and stupid article. Yeah, they have taxes and apparently some company down there didn’t feel like getting into a legal battle with California.

  8. Metro -Douche

    “OMG Texas isn’t perfect therefor it’s no better than CA or NY

    1. For me, the least libertarian thing about Texas is the state’s propensity to executions, regardless of the prisoner’s innocence. That, and their desire to emulate Singapore’s drug laws.

    2. for the rest of the day i will look for ways to incorporate “metro-douche” into conversations.

  9. How does a California law have any bearing on a company in Texas?

    1. SKUs
      SKUs
      SKUs
      SKUs
      SKUs…

      Inventory management costs money.

    2. Only way I can figure it out is if the company has California customers somewhere.

      1. They sell in California. And I am sure it was easier just to label all of the boots than try to label just those that are going to California.

        And there is probably some draconian fine for selling even a single pair of boots without the label. So why not label them all?

        1. I still want more companies to flip CA off and refuse to do business there.

          1. Note that all your national food brands have Pennsylvania registration compliance stamped on them.

          2. Hope you are in the market for a .50 rifle…

            In response to California’s ban of civilian ownership of .50 BMG rifles, Barrett suspended sales and service to all law enforcement agencies in California.[2]

            Barrett has also developed the .416 Barrett, a rifle round based on the .50 BMG. The purpose of this round is to allow first round hits out to 2,500 metres (2,730 yd) from a cold bore and is not prohibited for sale to civilians in California.

          3. Automakers kind of do. They have two emission standards; one legal for sale in CA and another federal emission standard.

            Note: I do not believe it’s legal to drive a federal emissions vehicle in CA.

  10. The City Occupancy Tax on the room was 6%, and the state Occupancy Tax was another 6%.

    “You tax what you want to discourage…”

    [Cough! Tourism!]

    “Uh, encourage…”

    [Cough! Incentives!]

    “Uh… Oops!”

  11. Here comes the regional KULTUR WAR bullshit. Yay. Thanks, Ira.

    1. You make anonbot’s posts seem varied, if you think about it, dude. LOL.

      1. Coming from you, that is hilarious.

        1. Seriously, lose the KULTUR WAR and TEAM RED TEAM BLUE interjections and see what’s left.

          1. Kind of makes you pine for DEMAND KURV.

        2. I heard Hilarious is engaged to Alec Baldwin.

  12. Then to the rental car. The actual rental rate was $18.38 a day. Hertz added on some charges for “vehicle license cost recovery” and “concession fee recovery” that brought it up to $28.07. That was subject to a 15% tax, or $4.22. I only had the car for about four and a half hours, so, again, state and local taxes got me for about a dollar an hour.”

    Are you saying that the fees are required by the government? Because it seems to me Hertz is just getting cute with the ways they can make you pay extra.

    1. That’s mostly a “furriner tax” to cover the sportsplexes and convention centers. Natives gon’t pay most of it. And yes, I am a native Texan, but in the Houston (more or less) Free State. Be glad you didn’t have to go to Austin.

  13. … but [people who don’t vote in Texas] are paying the price

    1. … but [people who don’t vote in Texas or who are being reimbursed by their employers] are paying the price

      Probably more true.

  14. Texas may not be a libertarian paradise, but I’m reasonably certain everything he complains about exists in NY as well. Unless NY doesn’t tax hotels and car rentals, and doesn’t inspect or regulate elevators. I’ve never been, so I wouldn’t know.

    On the other hand, I’m pretty sure we don’t have rent control or insanely restrictive gun laws. The Houston mayor also hasn’t gone around telling me what I should and shouldn’t eat. Plus, I don’t have to deal with New Yorkers.

    Tradeoffs, how do they work?

    1. Link to NYC’s Hotel Room Occupancy Tax.

      If the room rents for $40 or more, then the tax is $2.00 per day + 5.875% of the rent. FTL:

      All hotel operators in New York City that are required to collect the New York State and City sales taxes on hotel rooms must also collect an additional fee of $1.50 per unit per day. This fee is in addition to the State and City Sales taxes and the New York City Hotel Room Occupancy Tax.

      State sales tax in NYC:

      Items 2-8 – the City sales tax rate is 4.5% (in addition to the New York State sales and use tax of 4% and the Metropolitan Commuter Transportation District surcharge of 0.375%), for a total Sales and Use tax of 8.875 percent.

      1. [snipped due to length]

        I’m not going to crunch the numbers on a typical airport Hilton room, but I imagine NYC and DFW are close to each other.

        What a silly article.

        1. Yeah. “They told me Texas was better, but they still have a government! I’m astounded!”

          1. I heard it was just like Somalia but with Spanglish spoken there.

            1. No entiendo.

      2. I too thought it ridiculous for a New Yorker to complain about fees and surcharges. I live 50 miles from NYC and avoid the place. There is a fee, a fine, a tax, or a toll for everything you do there.

    2. Plus, I don’t have to deal with New Yorkers.

      Having lived in NYC a while, I can tell you this is the biggest benefit of living anywhere but NYC.

  15. “You can send me to hell or New York City, it’ll be the same to me”

  16. So.. someone promised you that libertopia was tax and duty-free?

  17. Ira, that’s all a bunch of small-time shit. The really non-libertarian stuff in Texas is the extremely cozy relationship between big government and big business there. Lots of pay-to-play and draining the taxpayers for silly projects. I believe it’s called “doing bidness.”

    Texas Republicans are the very definition of “big government conservatives.”

    And that doesn’t even get into all the issues with civil liberties there.

    That said, Texas is still a freer, wilder place than most of the East Coast.

    1. Exactly. There’s way worse stuff going on here than some petty ante sales taxes. And we’re still better off than California. That should be appalling to people.

  18. Of course it’s not a libertarian utopia.

    First off a “libertarian utopia” would last all of a week before it degenerated into complete anarchy and destroyed itself.

    Secondly it’s still run by a government with no practical limits on it’s power. That scenario is always going to favor the government over the people.

    1. Most libertarians don’t believe in “utopia”, but you can look at the effects of libertarianism to the extent it is embraced or rejected by a society. To the extent it is adopted (very little in most countries, but nonetheless…), libertarianism generally results in greater peace and more prosperity. So degeneration and destruction tend to be wishcasted projections of statists rather than actual, verifiable effects of libertarianism.

      1. True libertarianism is the belief in very very little or no government system. By it’s very definition the result of it’s full implementation would create a state of anarchy. It’s absurd to think that such a state would promote peace and prosperity.

        Thinking government should be much smaller than it currently is and wanting more concrete and uncompromising limits on it’s powers is not the same as libertarianism.

        Because someone doesn’t want the government telling them they can’t eat salt doesn’t make them a libertarian, it just means they have some semblance of common sense.

    2. “First off a “libertarian utopia” would last all of a week before it degenerated into complete anarchy and destroyed itself.”

      [Citation needed]

      [Krugman columns don’t count as citations]

      1. No True Scotsman and all that.

        Rapture in Bioshock? Not even Atlas Shrugged shows what a Libertarian utopia would be like, she just has John Galt talk about it.

        For the real world equivalent? Hong Kong for the laissez faire economic policy? According to this website, it is Estonia.

        http://footprints.blogs.com/es…..st_li.html

    3. Yup, Texas has no term limits for governor. Which means when the Ricktator’s latest term ends, he will have lasted longer than FDR did in the White House. And he can STILL go four more years after that, and after that… O_O

  19. Is there any state that doesn’t have the half-dozen rental car fees, surcharges, taxes, etc.?

    I think nearly every elevator, with few exceptions, I’ve ever ridden in had that little placard telling me who regulated it and where to inspect the certificate.

    Every place squeezes hotels because of the substantial number of people from out of town. Las Vegas had a 10% tax in 2002, and it was raised to 13% not too long ago. Same with the County and cities like Reno and Sparks.

    You can find substantial savings by renting a car away from the airport where there are far fewer fees like the “concession recovery fee”.

    1. Probably states with little or no tourism. North Datoka, perhaps?

  20. Someone lied to you if they said Texas is libertarian. I can’t imagine a libertarian would say that.

    1. Its all relative. On the sliding scale from Total State to Anarchy, Texas is probably marginally closer to the Anarchy end than NY.

      1. No you can’t use the word anarchy with such dickhead cops roaming about. Less taxes is one thing but being constantly harassed by jackboots is another.

  21. No state income tax, and they respect the Second Amendment. No way I’m ever going back to California.

  22. Maybe if we had more politicians in New York who were outspoken advocates of lower taxes and small government, we’d be better off. Or maybe we’d just be something like Texas.
    What??? If NY had lower taxes and smaller government it would be more like Texas. Even the taxes you mentioned bear that out.

    NYC
    Hotel Room Taxes
    Occupancy tax of $2.00 per day + 5.875%
    NY State Sales Tax 4%
    NY City Sales Tax 4.5%
    ———————-
    Total Tax 14.375 (Texas total tax 12%)

    Tax on Car Rentals
    Car Rental Tax of 11%
    State and Local Sales tax 0f 8.5%
    ————————
    NYC Total Tax 19.5% (Texas total 15%)

  23. Gotta love those rednecks of Texas, yee haw!

    http://www.Surf-Tools.tk

    1. We prefer to be called Brothers of the Crimson Nape.

      1. LOL!

        1. And we proclaim solidarity with our spiritual kin, the Mountain Williams.

  24. This really was the most pointless article I think I’ve ever read here.

  25. Black is beautiful

  26. Those taxes are intended to lighten the carpetbags of Yankees just like you. Come back any time.

  27. Interesting topic with pretty uninspired insight into the state. No mention of the incredibly high fines Texans get for traffic violations (I believe it’s #1 in the nation) nor any mention of the oil taxes the state collects that helps fund a significant amount of the social services.

    1. No mention of the incredibly high fines Texans get for traffic violations (I believe it’s #1 in the nation)

      Virginia’s still in the Union, aren’t they? At least Texas hasn’t pulled the “multiple hundreds of dollars in non-refundable court fees” to fight your ticket trick the way that, IIRC, VA and MA have.

  28. You’re preaching to the choir here. I was born here a lived all 38 years of my life here. We may not be Socialist California but there’s no Libertarian Texas either.

  29. It’s hardly Reason’s fault, as their not exactly the largest media outlet, but I kinda feel like it was a bad idea destroying all of the sort of libertarian but not really candidates. Ron Paul is obviously still in, but we lost people like Cain, Perry and Bachmann in the process. They certainly have faults, but can we really say the race is betterbecause of militant anti-libertarians like Santorum and Gingrich, or vaguely “pro-business” Romney? I miss the Tea Party candidates, for all of their faults, they were 100 times better than what we have now.

    1. I’ll maybe give you Cain (although regardless of how libertarian he was, the man was a dumbass) but Bachmann and Perry were stridently pro-war and have never missed an opportunity to sop to the religious right. How would they be any better?

    2. Please explain how Bachmann is any sort of libertarian. She consistently spouted big government social conservative policies and was adamant about carpet bombing Iran while she was on the campaign trail. She is essentially the female version of Santorum.

      As for Cain and Perry, well, one could argue that both of these men have some mild case of autism. Their sheer presence on the campaign trail reduced discussions and debates to the level of a high school senior civics class discussion.

    3. I picked Bachmann and Perry because yes, they are socons, but they also are sort of fiscally conservative. Maybe not as much as I would like, but Bachmann was elected to at least nominally decrease the size in government. Santorum is sort of fiscaly conservative too, but his record in the senate isn’t too good and I think, given the chance, he would support pretty much every law passed. I don’t think he has the balls to stop anything, while at least Bachmann and Perry have shown a rebellious streak in the past. Anybody would be better than Gingrich however, possibly even Obama.

      1. Ah, give me a minute here…
        Yes, Ron Paul is from Texas. (FWIW, I worked on his campaign in 1975. His Congressional campaign. And yes, I do have a tattoo of Texas (on my left bicep). You got a problem with that?

      2. Socon – about as diametrically opposed to liberty as a Trotskyite. This is the delusion that launched a thousand castigations – that fiscal responsibility somehow outweighed RightWingNannyStatism. Not to mention that your average Republican loses that weak grasp on fiscal sanity as soon as the DoD waves something shiny in his face.

      3. I picked Bachmann and Perry because yes, they are socons, but they also are sort of fiscally conservative.

        Sure he’s an axe murderer, but he is sort of polite.

        but Bachmann was elected to at least nominally decrease the size in government.

        How’d that work out?

        Santorum is sort of fiscaly conservative too

        As compared to who, Mao?

        Anybody would be better than Gingrich however

        Since he’s barely got more delegates in the GOP than Obama, I don’t see how that’s especially relevant.

  30. You should have tried to buy a bottle of liquor in the DFW metroplex. It would have given you material for one more page.

    The Baptists in north Texas have made it very hard to buy booze compared to Houston and other locations in south Texas.

    As a resident of Texas I enjoy our lack of income tax. Its nice to see everyone carry their own weight by paying sales tax rater than making those who are more successful financially get stuck with high income taxes.

    1. The Baptists in north Texas have made it very hard to buy booze compared to Houston and other locations in south Texas.

      Really? Sigel’s is one of the better liquor chains in the state. Centennial isn’t too bad either, and my soon to be in-laws are always prattling on about the wine and beer classes they’re attending at Whole Foods in DFW.

      1. And heeeere comes Speck’s!

      2. The problem is the ridiculous blue laws that make the shit ridiculously expensive and cumbersome to purchase.

  31. Governor Goodhair is no rocket scientist but at least he doesn’t try to smother industry with overly burdensome regulations nor does he try to “fix” every perceived social problem like Jerry Brown.

    1. When Rick Perry gets rid of redevelopment in Texas, then you can gloat.

  32. You could still make a libertarian utopia with hotel taxes…you’d presumably be taxing people from out of town to visit your libertarian paradise. The libertarian utopians aren’t paying that tax, so it’s still a utopia from their point of view.

    Ditto with car rental taxes.

    In a libertarian utopia, you would certainly still have elevator certification. It would be optional…but would it really be optional for a major hotel?

    Also, no one (that I know of) says that free markets will create a utopia. Just a better place to live than we have now.

    To be fair, there’s not a chance in hell (in this case Texas) that a cowboy hat or boots will come with a warning label in libertarian utopia.

  33. The anti-gay thing is a bit of an annoyance as well.

  34. It may indeed be the case that Texas is doing better than the rest of America because it has lower taxes and smaller government. But I was there for a quick trip this past weekend, and let me tell you, a libertarian utopia, it isn’t riem levis

  35. This isn’t an article about regulation in Texas, it’s just one person complaining about their trip.

    How about citing actual laws? How about doing actual research? How about comparisons to other states?

  36. roomate’s aunt earned $18544 the previous month. she is working on the computer and bought a $367500 home. All she did was get lucky and put to use the clues uncovered on this web site Nuttyrichdotcom

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