The saying goes, ‘everything is bigger (and better) in Texas’, a phrase coined sometime prior to the 1950s is applied to almost 'everything Texas' like the largest pair of jeans in the world worn by ‘Big Tex’ outside the Texas State Fair in Dallas.
The reality is though that Texas is only the 2nd largest state even though it occupies 268,581 square miles (give or take a few meandering miles of the Red River where Texas squabbles with Oklahoma over ownership rights) behind only Alaska. Of course Texans would argue that Alaska is really part of the United States since it is not contiguous with the rest of the states. Texas also happens to be the 2nd most populous state in the USA with almost 27.75-million residents. While Houston is the largest city in Texas and 4th largest in the US, the Dallas-Fort Worth metropolitan area is largest such ‘area’ in Texas and fourth largest in the US. San Antonio is the 2nd largest city in Texas. While most people think of Texas as just one big ‘flat land’ of prairie, and tumbleweeds, nothing could be further from the truth. Texas stretches from the Gulf Coast at sea level, all the way to Guadalupe (or ‘Signal’) Peak part of the Guadalupe Mountain range found within Guadalupe National Park, towering at 8751 feet above sea level.
Yes, from the Gulf Coast to the Texas Panhandle, from Dallas to El Paso, from Amarillo to Big Bend, from the Red River to the Rio Grande, Texas is immense in size, in diversity of landscape, in elevation, in geographic character, and culture. A big part of that culture can be gleamed from the term for which a major theme park is named, ‘Six Flags Over Texas.’ The history of Texas includes rule by Spain, the first European country to claim portions of Texas, followed by France and Mexico. Despite losing the ‘Battle of the Alamo on March 6, 1836, Texas won its independence from Mexico later that same year, becoming the ‘Republic of Texas’, and on December 29, 1845 the republic became the 28th state of the Union. Following the birth of Texas as a state, Mexico retaliated in the spring of 1846 in what would be called the Mexican-American War in which hostilities continued until the defeat of General Antonio Lopez de Santa Anna on October 9, 1847.
Within a short time thereafter hostilities ceased and the Treaty of Guadalupe Hidalgo was signed on February 2, 1848. The land ceded to the United States during this treaty included not only portions of Texas, but also parts of Oklahoma, Kansas, Wyoming, all of California, Nevada, Utah, New Mexico and most of Arizona and Colorado, for which the U.S. paid $15-million. But that wasn’t the end of the external Texas political influences, because Texas declared its secession in 1861 from the US and joined the Confederacy. Following the Civil War, Texas once again resumed its status as the 28th State. That’s a heck of a lot of history, and we have only skimmed through it.
More so than any other economic drivers, ‘cattle’ and ‘oil’ are responsible for much of the history and prosperity of Texas. Texas has more ranch and farm land than anywhere else in the US, and the chief agricultural product still today is cattle (but it also produces the most sheep and goats in the US as well). As soon as the civil war was over, people back east could not get enough cattle to satisfy their growing taste for beef, cattle ranches started springing up all over Texas, but predominately in the wide open western areas that were largely unsettled. Before the railroads established routes in Texas, ‘cowboys’ would punch cattle along the infamous cattle drive routes from west Texas through Oklahoma and on north to meet the rail heads of Kansas towns where they would be carried to stock yards and slaughter houses of Kansas City and Chicago, only to carry the beef in ice-filled ‘refrigerator cars’ to the big cities of the east coast. The glamor of the ‘wild west’ is centered on these Texas Cowboys, as can be found in stories like Larry McMurtry’s 1985 Pulitzer Prize-winning novel ‘Lonesome Dove’ (later adapted in an Emmy Award winning motion picture).
But on January 10, 1901 something happened near Beaumont Texas that would change Texas forever, a well at Spindletop struck oil, and the gusher blew for 9-days at an estimated rate of 100,000 barrels of oil per day. Soon thereafter the Texaco and Gulf Oil companies formed to develop production at Sindletop and the Texas Oil Boom was on and with it, the wealth of a state and a country. As a result of the Texas finds, the United States soon became the world’s leading oil producer, and many an independent ‘oil man’ became multi-millionaires almost overnight. Oil is not only the economic life blood of Texas but the dominant political force in the state. Did you know that until 1970, the Texas Railroad Commission which has always regulated oil and gas in Texas, actually controlled the price of crude oil throughout the world because it regulated the flow of oil from Texas? Texas refineries process about 4.6-million barrels of oil per day, with an estimated 5-billion barrels of oil reserves still in the ground within Texas. But times are a changing, and while ‘oil is still king in Texas’ the west Texas landscape has new residents along with the cows, miles and miles of wind turbines harvest clean energy and produce electrical power, in fact more wind power produced electricity than any other place on the planet.
Texas is so much more today that just oil and cows, and even the cultural influences of days gone by atr giving over to one of the most, if not the most, modern state in the U.S. The wealth of oil and cows paved the way for higher education within the state, and that education along with the economic boost both of those commodities provided allowed Texas to reduce taxes and provide economic incentives that attracted a diversified economy and brought in high tech industries ever since the mid-20th century including aerospace, transportation and computers. Texas currently shares the title of most Fortune 500 with California. Perhaps no single greater influence starting this progression was that of President Lyndon Baines Johnson, while serving as Vice-President to President John F. Kennedy when he secured the headquarters of the National Administration and Space Administration (NASA) at the start of the 'space race' during the 1960's. The Johnson Space Center, south of Houston, is still American's hub of space exploration, today actively planning a manned mission to Mars and beyond.
I am sure I could go on and on about Texas, but then you might think me a 'Hot Aired Texan', so I will just publish some factoids.
- The name Texas comes from the Indian word “tejas,” which means friends or allies.
- The Alamo in San Antonio is the state’s most popular historic site.
- Texas was its own independent nation from 1836 to 1845. It is the only state to become part of the U.S. by treaty and not territorial annexation.
- Many famous folks hail from The Lone Star State. Among the best known are politician and soldier Sam Houston; former U.S. president Lyndon B. Johnson and first lady Lady Bird Johnson; actresses Joan Crawford and Debbie Reynolds; philanthropist Melinda Gates; singers Janis Joplin and Willie Nelson; Supreme Court justice, Sandra Day O’Connor; news anchor Sam Donaldson; aviator and film producer Howard Hughes; and outlaws Bonnie Parker and Clyde Borrow.
- The state makes up 7.4% of the total area of the U.S. Three of the nation’s top 10 most populous are in Texas: Houston, Dallas and San Antonio.
- Home to Dell and Compaq, Texas is sometimes referred to as the Silicon Valley of the South.
- The Waco Bridge was the first suspension bridge built in the U.S. It is still used today.
About Sales Tax and this Series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series covering sales tax issues associated with each and every state tax jurisdiction in the United States. We have been publishing a "Sales Tax Tuesday" article (almost) every week this year; and we are getting really close to our ’50 weeks’.
Sales tax provides critical revenue for states as well as many counties and cities. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
Texas Sales Tax Facts
- The state sales tax rate is 6.25%, but can be as high as 8.25% with local taxes. Sales tax is imposed on the retail sale, lease and rental of most good and many services.
- Texas is one of the “big four” of sales tax, along with California, New York and Florida. These four states are the most populous and have the highest sale tax revenue collections in the U.S.
- Texas is an origin-based sourcing state. This means that sales tax is based on the location of the seller, not the buyer.
- Texas is not a Streamlined Sales Tax (SST) state.
- Texas has two sales tax holidays annually: a three-day tax free shopping period in May on energy saving products and a three-day tax holiday in August on Back to School items like clothing and supplies.
- On January 1, 2016, Texas plans to annex 40 cities and dis-annex three cities and one special purpose district. The expansion and contraction of tax jurisdictions can impact sales and use tax and mixed beverage tax in these areas.
Did You Know?
Green fees. Holiday greenery, such as wreaths, mistletoe, and Christmas trees, are all subject to sales tax in Texas unless purchased from a charitable organization. Sales tax is also waived if the customer buys the holiday decorations but hires a decorating service to put them up. However, if the decorating service provides the decorations, then both materials and labor are taxable.
Plane and simple. Texas now treat airplane owners more like car dealers thanks to a recent law change. Previously, plane purchasers were allowed to buy aircraft tax-exempt even if they planned to lease them. The exception being that owners typically retain priority use of the aircraft at-will, so they aren’t true re-sellers. The new legislation allows the exemption as long as 50% or more of the aircraft's use is by lessees.
Manual sales and use tax management, whether you are selling Christmas tinsel, Private Planes or anything in-between, is prone to errors. Sales tax collection, accounting, remittance and reporting also consumes valuable staff time in what can only be described as pass-through rather than revenue-generating activities. But there is an easier way, Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via AvaTax allows businesses to be fully sales tax compliant without sacrificing productivity.