The Chron does a "who wins and who loses" story on the new business tax plan. This is of course useful information, for reasons political and not, but I'm always wary of stuff like this:
Lenin Juarez and Terri King have a partnership in Houston that runs Action Gypsum Supply Co., a drywall supply firm with $30 million a year in sales. They would pay state business taxes for the first time under the bill. The company leases its lands so no property tax relief is expected.
Juarez said he can afford the $33,000 a year now, but it might have killed the business when they started it three years ago.
"Three years ago, it would have been a significant impact, an onerous impact," he said.
King said she worries about how the firm will pay the tax when construction goes into one of its cyclical slowdowns. "I don't know that we'll be able to absorb it."
Bill Sadler owns two Houston restaurants: Arturo's Uptown Italiano and Beso. He said the new tax will cost him $30,000 to $50,000. One restaurant is very successful and can easily pay the tax, he said, but the other is a "labor of love."
"It could put me in a position where I don't think it's worth paying on a marginal restaurant, which would put 60 people out of work," Sadler said. "There will be some businesses closed because they are just scraping by."
And for those of you who think having any kind of tax at all is a bad idea because it just contributes to the growth of government, read this. Supply and demand works in funny ways sometimes.
Back to the Chron story, this is more of concern:
[Bill Allaway, president of the Texas Taxpayers and Research Association.] said business support for the plan could evaporate if the Legislature does not guarantee a future reduction of public school property tax rates to at least $1 per $100 of valuation. He said that level of property tax savings is needed to offset the new business taxes.
"Almost everybody did their calculations at a dollar," Allaway said.
The Democrats don't expect to win a "gas tax holiday." But they are getting some "pro-consumer" publicity and an opportunity to portray the Republicans in power as anti-taxpayer for refusing to advance their idea.
They also are being inconsistent.
The Democrats' major complaint during the ongoing special session on school finance has been that Gov. Rick Perry and other GOP leaders have been advancing a plan to cut school property taxes without raising additional money for education.
Yet, their proposal for a 90-day gasoline tax suspension would cost Texas' public schools about $175 million. That's because the state constitution dedicates one-fourth of gasoline tax revenue to education. The other three-fourths goes to highways.
The Democrats say the lost money could be recouped from the $8.2 billion budgetary surplus or through federal transportation dollars.
But it is pointless to transfer funds around if, as the Democrats say and I believe, public education already is underfunded in Texas. Use the surplus to boost, not replace, money for the schools.
The cost of the "Gas Tax Holiday" can be paid for by increased federal funding from the transportation bill past last August by the Federal Government. The Federal Highway Administration projects the average annual increase of federal transportation funds to Texas at $788.1 million dollars.
(Before we rehash all the other objections that were raised in the comments to that earlier post, please go back and review what was said. There are perfectly sensible reasons to think the gas tax holiday is not a good idea, but unless I've totally misunderstood the accounting here, Robison's is not one of them.)Posted by Charles Kuffner on May 07, 2006 to Budget ballyhoo | TrackBack