income inequality

Gabriel Cristover Perez/KUT

A new study from Standard & Poor’s suggests that income inequality is leading to lower state tax revenues in Texas. The study also finds inequality weakens overall economic growth, with a stronger effect in states like Texas that depend on sales tax revenues.

Still, the state has seen expanded growth in average tax revenue, the study said – 5.48 percent revenue growth from 2000 to 2009 compared to the 4.07 percent in sales tax-dependent states and 5.25 percent growth in income tax-dependent states.

The credit-rating agency says the growing gap slows potential growth and lowers the growth of the state's overall tax base, which is “stronger and only statistically significant” in sales tax-reliant states. The inequality could prove problematic in future budgeting, as S&P says Texas can’t correct the problem by simply raising taxes.

Texas currently has the sixth highest level of income inequality, according to the Center on Budget and Policy Priorities, and the state’s lowest earners have seen their incomes drop 10 percent in the last decade. 

KUT News

Another national report card is out, and Texas households are still struggling to beef up their savings. 

Almost half of Texas households don’t have enough savings to pay for basic expenses for three months, which means most families aren’t prepared in the event of a job loss or health emergency.

According to the Corporation for Enterprise Development’s 2014 Assets and Opportunity Scorecard, the state’s policies are also not helping residents achieve financial security.

Veronica Zaragovia, KUT

President Barack Obama delivers his State of the Union address tonight. He’s expected to make a big deal about economic mobility and reducing income inequality in the U.S.

But the challenges are substantial when it comes to narrowing the divide. Texas has the eighth highest level of income inequality,  based on 2010 Census data.

"In terms of Texas, we have a lot of upper end income inequality," says Mark Frank, an economics professor at Sam Houston State University. "We have a lot of income inequality because we have the top 1 percent or .01 percent."