Question

Comparing Texas to other large, populous states such as California, New York, and Florida, what are the advantages and disadvantages to having a state income tax?

Answer 1

State IncomeTax is a tax system where the individual is liable to pay tax to the government on the basis of its income. Even acorporate is liable to pay taxes on the profits earned.

Such a tax has certain advantages such as :

Distribution of Wealth : Tax system allows the wealth to get distributed from the rich people to the poor people.Rich people pay higher taxes and this is used for the development of the poor people and thus the wealth gets distributed.

Revenue source for the government : It acts as a source of revenue for the government which is collected by the government officials and is mandate for each individualtopay the same. This revenue is used by the government for development purpose.

Disadvantages of Tax System

Uses a whole system to monitor the tax collection : One entire department with multiple people are exclusively dedicatied for this tax collection work.

Reduces the incentive to work harder : It reduces the incentive for the people towork harder as more the people earn, higher tax they are liable to pay.

Violation of citizen's individual freedom : Individual's freedom would be violated as they not free to take the decision where to spend the money they have earned.