Texas also has no state income tax, though. And property taxes are based on the value of the home, so lower values means lower property taxes.

And land values are based on expected net income attainable from the location (whether imputed rent or actual rent). Higher property taxes thus reduce land values, making homes more affordable upfront.

My understanding is that state income tax can be deducted from federal income tax. Retirement income is usually pretty low as well.

Very few things are directly deductible from federal income tax. Most deductions are from the taxable income.

So if you pay X in state income taxes, you'd deduct X from your overall federally taxed income. You end up only saving your federal tax rate times X, not X in federal taxes. So if you're taxed at 13% state and 35% federally, you'd pay 13% to the state. Then you'd still pay (barring other deductions) your federal taxes on 87% of your income.

Federal taxes don't work as a bare percentage, though. You pay a lower percentage on everything up to some number, then progressively higher percentages on brackets of your income up to your maximum tax rate. https://taxfoundation.org/2017-tax-brackets/

The higher property taxes are the more speculation is suppressed due to the high cost of carry.

>Texas has relatively high property taxes (higher than California)

Compared with most other states, California has lower property tax rate. Since Prop 13 passed in the 70s, the tax rate has been fixed at 1% of assessed value (with maximum yearly increments on the assessed value capped at 2%).