AUSTIN - The border region is funneling more money to more prosperous parts of the state as a result of the property tax cuts, a state budget expert says.

Dick Lavine, senior fiscal analyst for the Center for Public Policy Priorities, said because the border has a disproportionate number of lower income families, it is most heavily burdened by Texas’s regressive tax system.

Lavine made his comments after reviewing the Comptroller’s latest biennial study of the fairness of the state’s tax system, Texas Exemptions and Tax Incidence.

“We can’t really calibrate it but we can guess that money is flowing out of the border to more prosperous areas of the state. That is because we are using state taxes to replace local school property taxes,” Lavine told the Guardian.

“When you are taking state general revenue, which is mainly sales tax and consumption taxes, to cut property taxes, you know which families are winning and which families are losing. The kinds of families the border has most of are the ones who are losing.”

The Comptroller’s report shows that low- and moderate-income Texas families are bearing a disproportionate share of state and local taxes. For example, those earning less than $24,899 are paying 12.8 percent in state and local taxes. Those earning between $24,899 and $45,271 are paying 7.6 percent in sales and local taxes.

Things are better for those earning more, the Comptroller’s report states. For those earning $69,614 to $109,182, six percent is paid in state and local taxes. For those earning above $109,183, 4.7 percent is paid in state and local taxes.

Lavine said the report is useful because it looks at who pays the bill to begin with and who really bears the burden in the end. “Even if a business pays the tax to begin with, it is passed on, either in higher prices or lower wages for their workers or in lower profits for the owners,” he said.

Lavine said the Comptroller’s report clearly shows that Texas’s tax system puts an unfair burden on those who are least able to bear it.

“Working people, middle class people, are paying more than they need to help support public services in Texas while people who could afford to pay more and benefit from those same services are paying less than they really should,” he said.

The reason things are worse for low-income families, Lavine said, was the reliance on the regressive sales tax, which accounts for more than half the state’s tax revenue. He said things would be even worse if the sales tax was levied on groceries, medicine, and residential utilities.

“Even then, the sales tax comes down much, much, harder on families that are struggling to put food on the table,” Lavine said. “It’s just in the nature of the sales tax because people without a lot of money spend all that money on things that their families need and most of which is taxed, while people with a lot of money can buy everything they want plus have money left over for savings and investments that are often not taxed.”

Lavine said that as long Texas relies so heavily on the sales tax there will always be an “unfair” element to the system. He pointed out that, according to the Institute on Taxation and Economic Policy, Texas has the fifth most regressive tax system in the nation. The common thread with the four states with an more regressive system, he said, was the lack of a personal income tax.

“With the state personal income tax you can adjust the rates so that those who can afford to pay more do pay more. It helps offset the sales tax and the property tax,” Lavine said.

Lavine bemoaned the current mantra of the legislature – cutting property taxes.

“About half the property tax cuts are paid for through the new business tax, or margins tax, but the other half is paid for by general revenue, mostly through the sales tax, and the taxes on motor vehicle, gasoline, cigarettes, and alcohol,” Lavine said.

“When you look at who pays those taxes, compared to who benefits from property tax cuts, you will see that only the 20 percent of Texans with the highest incomes come out ahead. So, we are just digging ourselves even further into the hole by making that tax swap.”

Supporters of keeping Texas a low-tax state argue that it helps maintain an entrepreneurial spirit. Lavine said he understands that argument but does not buy it.