Texas is raking in a record-high amount in tax revenue, thanks in part to economic growth and surging inflation pushing the cost of everyday goods higher.
The Lone Star State collected $77.2 billion in taxes in the fiscal year through August, up 25.6% from the previous fiscal year, according to a release from state Comptroller Glenn Hegar.
Sales tax revenue, meanwhile, totaled about $43 million, about a 19.3% increase from fiscal year 2021.
"Over the last many months, economic growth and inflation have driven higher sales tax collections as demand remains strong and businesses and consumers continue to pay elevated prices for goods," Hegar said in the release.
The increase in tax revenue has only been in the double digits five times since 1988, according to Hegar, and even then the jump only ranged from 10% to 13%.
Texas does not have a state income tax or a corporate income tax, meaning that it depends heavily on its sales tax to generate revenue. Sales tax revenue tends to increase during periods of high inflation, because the price of everyday consumer goods like food, gasoline and clothing is also more expensive.
"The strong growth in August came from receipts remitted by the oil and gas mining sector, which were up by nearly 80% compared with a year ago," Hegar said.
Inflation has ripped higher over the past 12 months, regularly hitting new records each month. Although the torrid pace of inflation cooled slightly in July, the consumer price index remained at 8.5%, near the highest level in four decades.
Millions of Americans could be in store for higher taxes as a result of the hottest inflation in 40 years. That's because of a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to steeper prices for most goods.
For instance, a hypothetical Delaware resident who earned $60,000 in taxable income in 2019 and now makes $64,000 has not actually seen an increase in real income; the $64,000 she earns today has about the same purchasing power as the $60,000 she made in 2019.
On top of that, because her state's income tax brackets are not indexed to inflation, that higher salary pushes her into a higher property tax rate (6.6%), whereas before she was paying a rate of 5.5%. Though the resident's purchasing power is unchanged, her tax bill rises by $264.