The tax bill cometh

So how does Texas: The nation's highest sales taxes! grab you as a new state motto?

Texas would have the highest state sales tax in the country, businesses would pay a payroll tax and smokers would pay a dollar more for cigarettes in exchange for a cut in school property taxes under a bill approved Wednesday by a House committee.

The measure, which also includes new taxes on bottled water, auto repair services and car washes, would raise nearly $11 billion over the next two years, all of which would pay for lowering school property taxes by about one-third.

Obviously, the bottled water, auto repair, and car wash lobbies don't have that much juice. Why it is that the Lege is still unable to wrap its mind around expanding the sales tax to much of the service industry (on the assumption that more sales taxes is the right way to go, of course) - you know, the part of the economy that's expanding - is a mystery to me, and, I predict, the ultimate downfall of this folly. Tax revenue will not be able to keep up with the state's growth, and we'll be revisiting this unholy issue again before we know it.

House Speaker Tom Craddick said he hoped to see the bill debated by the full House next week, right after debate on a related measure proposing major changes in school funding and operations.

According to Save Texas Reps, here's what that means:

Republican House Speaker Tom Craddick is putting the screws to his fellow GOP lawmakers to pass a massive tax-hike bill out of the Ways & Means Committee today. He’s telling recalcitrant members who campaigned against taxes and don’t relish explaining to voters back home why they broke their pledges that it’s up to them: they can support his tax hikes or they can be defeated in next spring’s primaries.

Ye shall reap what ye sow.

Back to the Chron:

The new tax bill wouldn't increase overall education funding. Craddick and Ways and Means Chairman Jim Keffer, R-Eastland, said the goal instead was to lower local school property taxes, which now pay for most public school costs and are a major source of taxpayer anger, particularly in suburban, Republican-oriented communities.

"The focus needs to remain that this is a property tax reduction bill," Keffer said.

[...]

House Bill 2, the related education overhaul also headed for the House floor next week, would increase education funding by $3 billion over the next two years. But that money, which school groups have attacked as inadequate, would come from elsewhere in the state budget, not from the tax bill.

Apparently, the plan is to root around the furniture in the Capitol for loose change. Remember, we've already committed to restoring the CHIP funds that we heedlessly cut in 2003. You tell me where all that money is coming from.

Reaction to the business tax proposal was mixed. Representatives from chemical companies, electric utilities and large manufacturers expressed support. Several small-business owners criticized the proposal, saying that it would prevent them from hiring new employees.

The payroll tax also is opposed by retailers and other companies with large numbers of low-paid workers.

[...]

Gov. Rick Perry's opposition to a payroll tax helped kill a special session on school finance last spring. Perry said then that he feared the proposal would discourage companies from creating new jobs in Texas.

Spokeswoman Kathy Walt said Wednesday that the governor still has concerns about the tax and will remain involved in negotiations with lawmakers.

"We're still a long way from having the final (revenue) package developed," she said.

Which makes me wonder if all this isn't just a head fake. It's one thing to pass a bill with a tax hike. It's another to pass a bill with a tax hike that can and will be labeled as a job-killer. Craddick's primary threats notwithstanding, I just don't see how this sucker passes. Which is fine by me, since it's atrocious.

I'm still waiting to hear the details of the Democratic counterproposal on education spending. I hope they've got one for tax reform, too, because we sure need one.

One place where the Democrats have (somewhat surprisingly) come out swinging is a report from the DNC on how President Bush's budget screws his home state. Eddie has the highlights. Here's a sample:

Homeland Security

* The Bush 2006 budget cuts $420 million to state and local funding for homeland security, including a $55.7 million cut for Texas. These cuts will take police and firefighters off your streets.
* The Bush budget cuts the COPS program, which has put 6,124 officers on Texas streets, by 96 percent.

Health Care

* The Bush budget cuts $45 billion from Medicaid, enough to provide health care to 1.8 million children. Texas's share of these cuts is $2.7 billion.
* Bush's budget cuts the very same community and rural health care programs he touted during the campaign, even though more than 626,000 Texas residents have lost their health care coverage since Bush took office due to his failures.

Charles? Over to you, dude.

Posted by Charles Kuffner on March 03, 2005 to Budget ballyhoo | TrackBack