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U.S. Congressman Roger Williams speaks about border policy and issues during a forum at the Texas Public Policy Foundation in Austin, Texas (James Gregg/Austin American-Statesman). U.S. Congressman Roger Williams speaks about border policy and issues during a forum at the Texas Public Policy Foundation in Austin, Texas (James Gregg/Austin American-Statesman).

U.S. Congressman Roger Williams speaks about border policy and issues during a forum at the Texas Public Policy Foundation in Austin, Texas (James Gregg/Austin American-Statesman).

By Brandon Mulder October 23, 2020

No, Texas does not have lowest taxes and fewest regulations in the U.S.

For years, Texas Republicans have boasted about policies that they say have drawn out-of-state businesses to relocate to Texas and have led existing businesses to flourish. Former Gov. Rick Perry and others pointed to low taxes, light regulations and a pro-business attitude in describing the "Texas Miracle" — a catchphrase that emerged in the Perry era to explain the state’s booming economy.

While Perry has faded from mainstream politics after two failed presidential bids, the principles set forth under the Texas Miracle banner have not. U.S. Rep. Roger Williams, R-Austin, continued that line of reasoning in a tweet last Sunday10/18 that praised the state’s economic fortunes.

"Texas is the embodiment of freedom with lower taxes and less regulations than anywhere else in the U.S. — and because of these principles, we’re home to millions of skilled craftsmen and innovators that strengthen our economy every day," Williams wrote.

It’s true that state Republicans continue to pride themselves on keeping taxes low and regulations light. But claiming that Texas has fewer regulations and lower taxes than any other state stands on shaky ground.

‘Less regulations’

Measuring and ranking states’ regulatory rules has never been straightforward. There are various methods that policy analysts have used to quantify government regulations.

Some have taken a simplistic approach by counting words or pages in a government’s regulatory code. Take for instance President Donald Trump who, in 2017, stood next to a stack of 180,000 pages meant to represent the federal government’s burdensome regulatory code and his administration’s deregulatory agenda. With 17 million words, Texas ranks as the seventh-most regulated state by simple word count.

Other measurements narrowly analyze a specific area of regulations, or regulations that pertain to a certain industry group. For instance, the Institute of Justice, a libertarian public interest firm, releases an annual report that measures states’ occupational licensing requirements, where Texas is ranked 10th-least burdensome.

And others take more anecdotal approaches by using public surveys or surveys of industry stakeholders that measure perceptions of a state’s regulatory framework. For instance, Texas ranks around 28th for the number of people who believe that stricter environmental laws and regulations cost too many jobs and hurt the economy, according to a Pew Research Center survey.

In any case, Texas has never ranked as having "less regulations than anywhere else in the U.S." as Williams asserts.

"The regulatory thicket in Texas is dense," said Brandon Rottinghaus, a political science professor at the University of Houston.

"Generally speaking, it’s a state that has a lot of regulation because of a sizable health care community, the massive chemical manufacturing industry, and a host of occupational licensing restrictions," Rottinghaus said.

Perhaps the most advanced method for quantifying and ranking states’ entire regulatory framework comes from the Mercatus Center, a free-market think tank associated with George Mason University. In 2019, the Mercatus Center developed State RegData, a tool that uses text analysis and machine learning algorithms to quantify the administrative codes of 46 states and the District of Columbia.

Instead of looking at word or page counts of state codes, a method that has been criticized as being too simplistic and arbitrary, State RegData counts the number of times a code uses restrictive or directive terminology, words like "shall," "must," "may not," "required," and "prohibited."

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Comparing state codes this way, Texas ranks as the fifth most regulated state with about 263,000 regulatory restrictions in its text. California topped that list, followed by New York, Ohio and Illinois.

"Just on the basis of, is (Williams’) claim true or not, I would say it’s not true, at least by our measure," said James Broughel, a senior research fellow at the Mercatus Center who helped develop State RegData.

Rottinghaus and Broughel agree that there is a positive correlation between the size of a state’s population or economy and the volume of its regulations. Last month, Broughel and the Mercatus Center released a study on the relationship between regulatory volume and population size, which hypothesized that larger economies demand more regulations due to the diversity and size of their industries.

But even if calculating states’ regulatory volume per population, Texas would still not rank as the least-regulated state in the U.S. According to Broughel’s calculations, Texas has about nine restrictions for every 1,000 residents, which is the fourth lowest in the U.S. after Michigan, Florida and Arizona.

Calculating state restrictions per million dollars of gross state product, Texas is the second least restrictive state bested only by California — Texas Republicans’ favorite heel.

‘Lower taxes’

Williams’ other claim, that Texas has "lower taxes" than any other state, also is dubious. Texas is one of nine states without an income tax, "but the overall tax burden is still high," said Rottinghaus.

"Texas has a bunch of other taxes, like the franchise (business) tax, gas tax, and ‘sin’ taxes," the taxes levied on alcohol, tobacco and gambling, Rottinghaus said. "These also add up, and in most cases Texas is not ranked the lowest."

According to a 2020 report by the Tax Foundation, a nonpartisan Washington D.C. think tank, Texas has the fifth lowest overall tax burden per capita, with an average resident paying about 7.6% of their income toward state and local taxes.

Another study by the personal finance website WalletHub, found that Texas has the 19th lowest overall tax burden per capita with an average resident paying about 8.2% of their income to property and sales taxes.

Our ruling

Williams said that Texas has "lower taxes and less regulations than anywhere else in the U.S."

Texas is a big state with a large population and a diverse array of industries that demand a variety of regulations. There are various ways to quantify and compare Texas’ regulatory volume to other states, yet none rank Texas as having the fewest regulations in the U.S. Williams’ office did not respond to multiple inquiries asking how he figured his statement.

Studies also show that despite having no state income tax, its overall per capita tax burden does not rank as the lowest in the U.S.

We rate this claim False.

Our Sources

Tweet from U.S. Rep Roger Williams, Oct. 18, 2020

NBC News, Trump cuts red tape at White House event touting deregulation, Dec. 14, 2017

Institute for Justice, License to Work, Nov. 2017 

Pew Research Center, Public support for environmental regulations varies by state, Feb. 25, 2016

Interview with Brandon Rottinghaus, politics professor at the University of Houston, Oct. 21, 2020

Mercatus Center, Quantifying Regulation in US States with State RegData 2.0, Aug. 31, 2020

UC Hastings Law, Administrative Law: The Trouble with Counting, 2019

Interview with James Broughel, senior research fellow at the Mercatus Center, Oct. 21, 2020

James Bailey, et al., Larger Polities Are More Regulated, Sept. 2020

The Tax Foundation, Facts and Figures, 2020

WalletHub, 2020’s Tax Burden by State, June 24, 2020

Browse the Truth-O-Meter

More by Brandon Mulder

No, Texas does not have lowest taxes and fewest regulations in the U.S.

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