South

Florida’s Growth-Funded Model Florida has no personal income tax and sustains itself on a combination of sales taxes, property taxes, documentary stamp taxes on real estate transactions, and the economic windfall of being one of the country’s premier destinations for both tourism and retiree migration. The model has worked during periods of growth, and it has created fiscal vulnerabilities that become visible when growth slows. Revenue Structure Sales tax is the primary state revenue source at 6%, with a broad base that includes many services. Florida’s sales tax revenues are strongly correlated with tourism and consumer spending, making them sensitive to national economic conditions and travel patterns. ...

Texas’s Fiscal Model Texas is the most influential fiscal model in American state government—a large, fast-growing state that has maintained no personal income tax, attracted enormous business investment, and used its model as a competitive wedge against higher-tax states. Whether Texas’s approach represents a sustainable model of governance or a set of deferred costs and distributional choices that will eventually come due is one of the defining debates in state fiscal policy. ...

The Fiscal Character of the South The South is America’s fastest-growing region and, in many ways, the testing ground for the low-tax, low-service model of governance. The combination of population growth, relatively low public sector legacy costs, and aggressive interstate tax competition has produced a distinctive fiscal philosophy—and significant debate about whether it actually delivers better outcomes for residents. The region spans three Census divisions: the South Atlantic, East South Central, and West South Central, covering sixteen states with considerable internal variation. ...