June 23, 2005
Same old same old

Perry's plan helps rich at others' expense

Gov. Rick Perry's plan for property tax relief would provide a windfall for the wealthiest families in Texas, but for lower-income renters the governor's plan would be a financial drain on the family budget, a Houston Chronicle analysis showed.

And after more than a year of legislative wrangling over property tax relief, the tax savings for the median family in Texas would amount to about $150 a year under Perry's plan ó a savings of about $12.75 a month.

The real winner of the school property tax cuts would be business, which pays about 54 percent of all the school property taxes in Texas.

Same stuff, different day. Quelle surprise. Got any new ideas, fellas?

One thing to keep in mind here, and it's a fallacy that I've fallen prey to before, is that it really is (or at least should be) a question of when, not if, a new school finance plan passes. This is because Governor Perry can call as many special sessions as he sees fit, and given the smell of toast already wafting about him, he's sure to be bullheaded on this point. Unless the Lege basically tells him to drop dead, or unless the Texas Supreme Court comes riding to his aid in the immediate future, don't expect this session to be the end of it (barring an actual agreement, of course).

Which is why Rep. Scott Hochberg is dead on right when he says Make sure the fix isn't worse than the problem. We don't need a plan, we need a better plan. Rick Perry doesn't have one. Let's not lower our standards even further to accomodate him on that. Link via Greg.

Posted by Charles Kuffner on June 23, 2005 to Budget ballyhoo | TrackBack

One big problem here is that half the people complain we're not doing enough to cut property taxes in these proposals, and others complain that sales taxes are being jacked up to punitive levels.

This, folks, is what happens, when lack of a state income tax is sacrosanct. Tax revenues from regular citizens come (generally) from sales tax, income tax and property tax. Take one of those forms away, and the other two necessarily must be higher. It ain't rocket science.

I'm not advocating a state income tax, but these yahoos need to realize that without one, all you're doing is rebalancing one very high tax for another very high tax.

Personally, I'd prefer not to cut property tax rates per se, but to significantly increase the size of homestead exemptions. And I'd make the exemption a fixed dollar amount, not a percentage.

Posted by: Tim on June 23, 2005 12:36 PM

Having experienced a variety of state tax systems, I will make this comment: simple progressive taxes (like an income tax) are a lot easier to cope with. In DC I payed enormous income taxes (9.5%) and incredibly tiny property tax (couple hundred bucks a year on a home worth over $200K); in Massachusetts it was more of a balance (5% income tax when I lived there).

The nice thing about an income tax is that its painless (it just disappears each paycheck) and it's quite predictable for the state. The overhead of administering it is low. It can be as simple as "you pay x% of your federal tax in state taxes" with a 1-page form.

There is a good reason that nearly every other state has one.

Posted by: John on June 23, 2005 6:46 PM

What the title should say is, "Same Old Same Old From The Houston Chronicle," which is to say, same old lies and distortions.

The accurate description for the proposed shift in the tax burden is that it's *away from* property taxpayers who don't have kids in school but have been overtaxed to pay for public education *and over to* people with kids in school who were getting away with *not paying their fair share* of the cost of public education, even though it's mostly their kids filling up the schools.

If the Chron sees the "equity" in, for example, taxing the crapola out of 24 retired homeowners living on fixed incomes to finance the yearly per pupil expenditures for one low income renter with four kids in the school district, the Chron doesn't just need new glasses, it needs a new editorial board.

Top that off with the knowledge that retired homeowners across Texas are being forced to either borrow money to pay their school taxes or defer those taxes against the estate and hope they die before the school district takes their homes.

Would these guys take a higher sales tax over the current property tax? Heck yeah -- because the government can't take away their homes for "non-payment of sales taxes."

Posted by: ttyler5 on June 24, 2005 10:00 AM


"same old lies and distortions"

Iím not sure if the echo chamber has permanently damaged your thinking, but the GOP push to reduce property taxes by shifting it to sales tax (the most regressive of taxes), should be called for what it is: a further shift of the tax burden to middle and lower income Texans.

Donít go around saying retired homeowners are the reason the GOP is pushing this plan because the numbers simply donít add up. The people who get the biggest break are homeowners with property values over $300,000.00. If you want to go around beating a drum for this tax shift, fine, you are entitled to your opinion. But donít say this is for people being taxed out of their homes. The GOP plan is about shifting the tax burden.

Now if you wanted to say, triple the homestead exemption and raise senior exemptions, which would help the folks you describe, youíd be Scott Hochberg or Bill White. But not a member of the GOP.

Posted by: Red Dog on June 24, 2005 2:00 PM

Red Dog, you still don't get it.

The reason someone with a $300K home gets the "biggest break" is because they are paying the highest real dollar amount in property taxes to the school district.

There is, for example, a home "just around the corner" from ours (assessed at $80k) that is assessed at over $8ook.

The people who live there, like us, have no kids enrolled in the school district, but of course they are paying ten times in real dollars what we are paying.

If the state cuts the property tax in half for both our homes, they will *still* be paying ten times in real dollars what we are paying.

We have a Toyota and a 10 year old truck in the driveway.

These folks drive a couple of Mercedes and a Hummer, right now, and it is a major feature of this class that they buy new cars every year or two.

Do you have any idea what the total sales tax was on those vehicles? Easily more than the entire amount of sales tax we will pay all year, and probably much higher.

I am certain that if I were invited to their home for a visit, I would see high-priced items through-out the house that have generated tens of thousands of dollars in Texas sales taxes.

The Chronicle report is a sham, because the concept of "equity" it is based on is a sham.

Posted by: ttyler5 on June 24, 2005 11:08 PM

The parents of children are not the only folks to benefit from their education. It is a public good. Higher education means a better workforce for the business sector. Low education is a factor in our prison population. I have no kids in school but feel schools and libraries are much more important than prisons and tax breaks for the rich. As a home owner I'd gladly pass up on that 15.00 a month break. Heck I'd even be willing to pay another 15.00 if they would raise the senior exemption. Maybe that is something I could use someday.

Closing some loopholes in the corporate welfare system would be nice. Those handful of cows on the oil refinery properties along the Houston Ship Channel make that property qualify as agricultural, not industry. A huge handout that is unnecessary at all times but especially now when gas is is over $2.00 at the pump.

Posted by: David Bigwood on June 24, 2005 11:42 PM

I have no kids in school but feel schools and libraries are much more important than prisons and tax breaks for the rich. As a home owner I'd gladly pass up on that 15.00 a month break. Heck I'd even be willing to pay another 15.00 if they would raise the senior exemption.

Why? What about rich seniors? Why should they get an automatic kiss-butt exemption that isn't need-based? They get enough preferential treatment in the tax code as it is. If you want to target financial need, fine. But enough is enough on the blanket senior handouts which don't even factor financial need into the equation.

Posted by: Tim on June 25, 2005 9:09 AM

Tim, David, you guys aren't getting this yet, anymore than RedDog was, above.

The shift from the property tax is also a shift from local to state funding. The property tax is the root cause of district-to-district funding inequities in Texas school finance. The best way to even out the inequities is to do it by equitable disbursement formulas through state funding. The ideal system would be to do it all through state funding, but the people who run the public school districts are against that all the way.

The argument that this is a "tax break" for the wealthy is a sham. This is because the property tax rate is a fixed rate on a fixed assessment, while the yearly sales tax "bill" for the better-off Texans is driven by expensive purchases. For example, a high-income Texan who buys a $20,000 plasma tv spends almost 3 times as much in sales taxes as our yearly property tax bill to the local school district. Texas schools will get much more out of the wealthier "conspicuous consumer" Texans through tapping the sales tax.

As for the school districts themselves, are you willing to pay that extra "$15.00" a month to a school district that is building a $20 million football stadium? That is paying a "head coach" $85,000 a year while it is paying its most experienced teacher $50,000 a year? That spends the equivalent of three teachers salaries every year to have a tabloid newspaper filled with district propoganda produced and mass-mailed to every home in the school district? That, out of a $100 million a year budget wastes $10-12 million of it on sheer mismanagement?

They've got lotsa money to do things like pay the super $140,000 a year and give him a house and a car and a credit card at taxpayer expense, and hire a $50,000 a year public relations officer and give her a staff --- but when it comes to giving teachers money for classroom supplies and teacher's aids, well, that's just a real problem!

Before anyone tries to stick the rest of us with higher school taxes and drive sick, old, retired people barely getting by on SS from their homes -- which, in case anyone is unaware of it, is happening now and has been happening for some time all across Texas --- they should find out how the incompetent, wasteful and greedy boobs who run these public school districts are actually spending the money.

Posted by: ttyler5 on June 25, 2005 2:54 PM

We have heard the reasoning put forth to support a state personal income tax and I find it interesting that the supporters of a state personal income tax often do not address the fact the stateís franchise tax, which has a corporate income tax component, is most widely avoided state business tax in the U.S.

Only about 14% of the corporations that could pay the Texas franchise tax actually do and this estimate does not accurately account for the thousands of out-of-state corporations that are doing business in Texas and avoiding this tax.

So, why would I support a state personal income tax when the wealthiest corporations in America will not pay my stateís corporate franchise tax?

Posted by: sstatetaxx on June 25, 2005 6:11 PM