How do some states (TN, FL, etc) get by with having no income tax? Why can’t every state get rid of it?
In: Economics
States have multiple revenue sources. Income tax, sales tax, property tax, tolls, registration fees, fines and fees in court cases, excise taxes on things like alcohol sales, severance taxes and others. States that don’t have income tax just use other sources for their revenue. Wyoming, for example, has a lot of revenue from severance taxes, which are taxes paid by companies to take oil and gas and other minerals from Wyoming. Florida has a strong tourism industry so sales and hospitality taxes make up the difference in income tax. Other states like Washington or Tennessee rely mostly in sales tax. There are reasons why some people consider different taxes fair or not. Sales tax tends to be a flat rate, which is regressive, meaning it costs poor people a higher portion of their income than it costs rich people. Income tax at the state level often is also a flat tax (again regressive), but some states have higher rates the more someone earns.
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