Can Texas Afford to Be Independent?

Texas produced $2.932 trillion in goods and services in 2025, according to the Bureau of Economic Analysis. Set beside the International Monetary Fund's estimates for countries that year, that places Texas eighth in the world, between France and Russia and ahead of Italy and Canada. The Texas Nationalist Movement's 2026 report Can Texas Make It? starts from that ranking and asks a narrower question: whether Texans, taxed at today's rates, already pay enough to fund the government an independent Texas would need.

The report's answer is yes. It calls the finding self-sufficiency, and it claims no surplus.

Two ledgers

Averaged over the six fiscal years from 2019 through 2024, the report finds that Texans paid $453.5 billion a year to Washington and Austin combined. Most of it, $351.9 billion, was federal taxes counted by the Internal Revenue Service. The rest was state taxes and fees, with federal money that passes through the state budget left out.

Against that the report sets the cost of governing Texas. It starts from the Rockefeller Institute of Government's count of all federal spending in the state, $431.4 billion a year on average, and takes out two things. The first is $176.9 billion in benefits that belong to individuals and follow them wherever they live: Social Security, Medicare, veterans' cash benefits and federal pensions. The second is $50.7 billion a year in one-time COVID relief. That leaves $203.8 billion of federal spending on defense, agencies, grants including Medicaid, and contracts. Add $91.5 billion of state-funded spending, and governing Texas costs $295.3 billion a year.

The report applies the same rule to both columns. If Social Security and Medicare come off the cost side, the payroll taxes that fund them come off the revenue side, an estimated $120 billion a year. That leaves roughly $333 billion paid against $295 billion in cost. Once the share of Medicare paid from general taxes gets the same treatment, the report concludes that Texas "lands within roughly 30 billion dollars of break-even on its current government functions, at current tax levels." It reaches that result with no personal income tax, which Texas voters banned by constitutional amendment in 2019.

What independence adds

An independent Texas would also run the functions Washington now performs from outside the state: a central bank, a foreign ministry and embassies, a customs service, and regulators for aviation, drugs, finance and communications. The report prices that new layer at $5 billion to $15 billion a year, one to three percent of Texas revenue, and notes that central banks run on seigniorage and most of those regulators on fees. For defense it uses Australia's budget of about $35 billion as a benchmark, well under the roughly $60 billion a year of federal defense spending in Texas that its ledger already counts as a cost.

The figure critics cite

Opponents usually answer with a different measure. The Rockefeller Institute's balance-of-payments study found that in federal fiscal 2023 Washington spent $458.6 billion in Texas and collected $378.6 billion in revenue attributed to it, a gap of about $80 billion. TNM's report cites the study itself. Its position is that the study measures how much federal money flows into a state in a year, which is a separate question from whether a state can pay for its own government.

The report traces most of that gap to borrowing and to benefits Texans paid for in advance. In fiscal 2024 Washington spent about $1.37 for every dollar it collected, so nearly every state shows more federal money arriving than leaving, and the Rockefeller study itself found that "Only three states posted a negative balance of payments for 2023." The study also counts Texans' own Social Security and Medicare benefits, funded through their payroll taxes, as money Texas received. Count borrowed money as a tax deferred to later years, and in the report's analysis the direction reverses. Its finding is that Texas is a net contributor. By the accounting of USAFacts, which compares the taxes a state pays with the federal spending it receives, Texas sent Washington $68.1 billion more than it got back in fiscal 2024, the third-largest net contribution of any state, behind California and New York.

The same borrowing carries a running cost. Applying Texas's 8.2 percent share of federal tax collections to Washington's books, the report estimates Texans' share of federal net interest at about $72 billion in fiscal 2024 and roughly $80 billion in fiscal 2025. That money services past borrowing and buys no current service.

What the report leaves to a negotiation

The report describes its numbers as a snapshot of today's tax flows, not a forecast of an independent economy. It tests the result against a 10 percent cut to the Texas economy at once, more than twice the long-run cost Britain's Office for Budget Responsibility estimates for Brexit, and finds the operating budget still near break-even. Texas's share of the federal debt and the continuation of benefits Texans earned would be settled after a vote, and TNM's position on both is that Texas brings claims of its own to that table.

By the report's count, more than 180 of the world's roughly 193 sovereign states run a complete government on a smaller economy than Texas.