Texas and New York are preparing to send opposing signals to investors

Next Tuesday, November 5, New York voters are likely to choose a new mayor who has campaigned for income tax increases for higher-income households and businesses; Meanwhile, on the same day, Texas voters are expected to approve ballot measures banning the state’s capital gains tax and the imposition of a tax on financial transactions. The increased opposition is sure to help the Texas Stock Exchange (TXSE), the new Dallas-based exchange due to launch in 2026.

On October 31st Wall Street Journal report on a new $90 million commitment to TXSE from JP Morgan, JPMorgan Chase’s investment bank, noted that TXSE has “billed itself as more CEO-friendly” than the New York Stock Exchange, adding that “previous investors include Citadel Securities, BlackRock and Charles Schwab.” The new injection from JP Morgan, the WSJ added, “brings TXSE’s total fundraising to date to over $250 million.”

Ballot proposals banning a state death tax, a financial transaction tax and a capital gains tax aren’t the only 2025 ballot measures set to make Texas an even more attractive destination to live, work and invest. Texas voters will have the opportunity to enact reforms that provide further tax cuts, particularly property tax relief.

The poll shows Texas voters are likely to approve Proposition 13, which would provide property tax relief to Lone Star State residents through a 40 percent increase in the homestead exemption. The state’s $100,000 homestead exemption will increase to $140,000 if voters enact Proposition 13 next Tuesday.

“While not a permanent fix for property taxes, the amendment should help slow property tax increases for all homeowners,” says Texans for Fiscal Responsibility (TFR), which has supported Proposition 13. If passed, Proposition 9 would significantly increase the existing $2,500 inventory tax exemption to $125,000.

“Texas is one of only nine states where small business owners pay taxes on the value of their inventory, personal property and anything else used to generate income,” the Texas chapter of the National Federation of Independent Business noted in its statement of support for Proposition 9. The NFIB adds that passage of Proposition 9 “will save Texas small businesses even more than 500 million dollars”.

“This constitutional amendment simplifies compliance, reduces bureaucratic costs and incentivizes productivity,” notes TFR analysis of Proposition 9. “Reduces burdensome taxation that can stifle economic growth, especially for small businesses. This is pro-growth, pro-business reform that respects taxpayers and limits government overreach.”

The ballot measures likely to be approved by Texas voters on Nov. 5 underscore why governors and legislative leaders in so many states are seeking to phase out their income tax that would make Texas join the club of no-income-tax states. The eight existing states with no income tax have already demonstrated the economic benefits of avoiding an income tax, and many are now seeking to extend that advantage by making their tax codes even more competitive.

Governors in several states with no income tax are seeking further tax relief

Texas isn’t the only state without an income tax where lawmakers are seeking estate tax relief. In fact, in Florida without an income tax, Gov. Ron DeSantis is now pushing for a complete repeal of Florida estate taxes. Specifically, Governor DeSantis is championing a single measure for the 2026 ballot that would begin to eliminate all property taxes in Florida. Republicans in the Florida House of Representatives introduced eight property tax relief proposals on Oct. 17, with seven of them being constitutional amendments that require voter approval in November 2026.

Constitutional amendments must be approved by at least 60% of voters to take effect. The James Madison Institute, a Florida-based think tank, recently conducted a poll that found 65 percent of respondents said they would support a ballot measure to provide property tax relief.

Lawmakers in other states are also seeking property tax relief or caps next year. In Tennessee, for example, without an income tax, lawmakers will seek to pass a bill in 2026 that limits the growth of property tax bills. Tennessee is currently one of four states without some sort of property tax cap on the books.

“To provide relief to taxpayers, we must set firm limits on how fast local governments can increase their budgets,” Justin Owen, president of the Tennessee Beacon Center, and John Hendrickson, policy director at Iowans for Tax Relief, wrote in an Oct. 17 release. article in Government journal. “This will ensure that taxes do not exceed the ability of families and businesses to pay. Taxpayers must be protected from uncontrolled growth in local government spending.”

“Eliminating property taxes may be a noble solution, but tax policy must always be approached wisely,” added Owen and Hendrickson. “Replacing property taxes with a new tax, or raising an existing tax to a higher rate, or even transferring more authority to the state budget, are not necessarily sound tax policies. The best approach to lower taxes is to limit local government spending.”

There were already many reasons for lawmakers in states without an income tax to pursue estate tax cuts, estate tax caps and other forms of tax relief. But the case for doing so is bolstered by the fact that governors and lawmakers in nearly a dozen states across the country are currently seeking to phase out their income taxes. As more states eliminate their income tax, the lack of a state income tax will become less of an advantage. Leaders of states with no income tax — such as Governors Abbott in Texas, DeSantis in Florida and Lee in Tennessee — have made it clear they are not resting on their laurels and welcome competition.