June 25, 2008
Dan Patrick wants to raise your taxes

It's true. He says so himself.

A bigger and broader sales tax is being kicked around at the Texas Capitol once again by legislators wanting to scrap the new business tax and further reduce property taxes.

"We need to return Texas to a business-friendly climate. We need to make home ownership affordable. We need to fund our schools for the long term, and the best way to do this is through sales tax," said state Sen. Dan Patrick, R-Houston.

He has called for repealing the business tax while boosting the sales tax 2 percentage points -- from the current total of 8.25 percent for both state and local taxes -- and applying it to some now-exempt items. That increase would generate an estimated $6 billion a year, about double the amount raised by the changes to the business tax.

Many Republicans, including Patrick, have long embraced the idea of relying more on the sales tax to pay for government services. At its convention this month, the Texas Republican Party included abolishing the school property tax -- to be replaced with the sales tax and spending cuts -- in its platform.

"The fairest way to tax people is on what they consume and their ability to pay, not on where they live," Patrick said.


Some taxpayers prefer the sales tax because it is paid incrementally, whereas the property tax is paid in a lump sum and can increase even when a property owner's ability to pay does not, experts say. But the sales tax hits some taxpayers harder than others.

"Lower- and middle-income families spend everything they have ... just to buy things that their families need," said Dick Lavine of the Center for Public Policy Priorities in Austin.

Color me shocked at this suggestion. As Rep. Jim Keffer says in the piece, we've been down this sales-tax-for-property-tax-swap road before, and it always leads to the same place: Most people wind up paying more taxes under such a scheme. Oddly enough, rich people like Dan Patrick tend to pay less. Funny how that works, isn't it?

One more thing:

Increasing the reliance on sales tax has its problems, said Robert Ward, deputy director of the Rockefeller Institute of Government at the State University of New York.

"A 10 percent sales tax is a very high sales tax," Ward said. "At some point, a high tax rate drives economic activity out entirely or at least underground."

Higher taxes and more crime! What's not to like? You da man, Dan. Thanks to Eye on Williamson for the catch.

Posted by Charles Kuffner on June 25, 2008 to Budget ballyhoo