Texas is cementing its reputation as one of the most business-friendly states in America, and now, it’s written into the state’s constitution.
Voters approved three pro-business tax amendments on Election Day, ensuring that the Lone Star State can never impose taxes on capital gains, estates or inheritances, and certain securities transactions.
While Texas doesn’t currently levy these taxes, the new constitutional amendments make that tax certainty permanent, sending a signal to investors and corporations that the state’s low-tax structure is here to stay.
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“These votes make it clear that Texas’ low-tax structure isn’t just policy, it’s now permanent,” Carliss Chatman, a law professor at Southern Methodist University’s Dedman School of Law, told FOX Business. “Whereas other states try to lure an Amazon or Facebook with temporary tax breaks or incentives, Texas doesn’t have to because we would never charge those taxes anyway. The incentives here are permanent, and now it’s unconstitutional for the state to start taxing you.”
Here’s what the three measures mean:
- Capital gains tax ban: Prevents Texas from ever taxing profits from the sale of investments, real estate, or other capital assets, a move meant to reassure investors and entrepreneurs.
- Securities transaction tax ban: Bars the state from imposing taxes on financial trades or payroll transactions, effectively ruling out a “Wall Street tax” on buying or selling stocks.
- Estate and inheritance tax ban: Prohibits any future taxation on wealth transfers after death, a safeguard for business owners and families looking to pass assets to heirs.
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That’s the message Texas is sending not only to the more than 200 companies that have moved their headquarters to the state since the COVID-19 pandemic, including Caterpillar, CBRE, Chevron, Hewlett Packard Enterprises, KFC and Oracle, but also to potential newcomers weighing relocation.
Critics argue that locking in these bans could hamstring future legislatures from raising revenue during economic downturns or to fund essential state services. It also forces the state to rely more heavily on property and sales taxes, which tend to hit middle- and lower-income residents harder.
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Supporters counter that Texas’ growing economy – now the eighth-largest in the world – generates more than enough revenue without such taxes, pointing to the state’s budget surplus and rapid job growth as evidence that low taxes can fuel prosperity rather than constrain it.
The timing is also strategic. The Texas Stock Exchange (TXSE), which recently secured SEC approval, is slated to open in Dallas in 2026, positioning itself as a direct challenger to the New York Stock Exchange and the Nasdaq.
TXSE executives say the goal is to revitalize competition and attract more companies to go public by offering a more affordable and business-friendly listing environment. Over the past 25 years, the number of publicly traded companies in the U.S. has dropped by nearly 45%, according to the exchange, a decline it hopes to reverse.
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Meanwhile, on both coasts, Democrats are taking the opposite approach. In California, a proposed ballot measure would impose a 5% wealth tax on high-net-worth residents to help fund the state’s Medicaid program — underscoring a growing divide in how states approach taxing success.
With these constitutional bans now enshrined, Texas has sent a clear message to Wall Street and Main Street alike: Y’all Street is open for business – permanently.
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