Talking about the T word

Scott McCown brings up the subject of taxes but leaves it short of where to go from here.

If a stronger economy, honest budgeting and pitting priorities against each other aren’t the answer, what is? Texas must modestly increase taxes. No one is suggesting that Texas become a high-tax state, but Texas must raise the money needed to invest in education and other building blocks of a strong economy. As a group, Texans pay low taxes, and as a percentage of our economy our contribution has been falling.

This is not a question of living within our means. Texans have the resources in our trillion-dollar economy to meet today’s needs and build a prosperous future. But until we fix our tax system, we can’t make important investments for the common good.

The issue isn’t whether to increase taxes, but how. Our state’s major tax is a sales tax on goods – a tax designed for yesterday’s economy when we sold more goods and fewer services.

The business tax is also flawed – redesigned in 2006 to help pay for a property tax cut, it instead leaves us $10 billion per biennium short. And our state has tax giveaways and loopholes galore.

Between now and the 2013 legislative session, Texans must square our shoulders and do two things.

First, we must solve some technical problems – how do we modernize the sales tax, reform the business tax and address tax giveaways and loopholes so we have a smart and fair tax system that produces adequate revenue.

Second, we must work together to build the public will for a tax increase. There’s no other answer.

What McCown doesn’t say is which taxes should be increased. I feel reasonably confident saying that the CPPP is not about to begin plumping for the sales tax to be hiked, as that would be a regressive tax increase. To expand the sales tax to include more services, and to remove some questionable exemptions to the sales tax such as those for bottled water and high cost gas, sure. But to raise the base percentage, I don’t think so. I sure hope not, anyway.

The missing piece of the puzzle here is property taxes. The problem, as we well know, is that the business margins tax and the increase to the cigarette tax from 2006 have not come close to paying for the property tax cut of that same year. To me, the goal needs to be to close the structural deficit that was caused by this tax swap. If that can be done by simply tweaking the margins tax, or by scrapping it for a better business tax, that’s fine. If it can be done by fixing the margins tax and revamping the sales tax as described above, that’s fine too. But if we can’t do it with those things alone, then it’s the property tax rate we need to talk about increasing. There are some exemptions to property taxes that we can examine before we get to that, but if we’re really talking about raising taxes then that’s what we need to be talking about. I’m not sure if McCown avoided the topic because he ran out of space or because he wanted someone else to be the one to bring it up first. If so, here it is. Now we just need the people who are running for office to start talking about it.

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2 Responses to Talking about the T word

  1. robert kane says:

    I bet we see nearly a 10% sales tax within the next year or 2. Los Angeles has it, Seattle has it, and as soon as the state says the max can be whatever, we’ll be there.

  2. mary t. says:

    My sisters live in the north/northwest suburbs of Chicago and the total of all the sales tax is 11%.

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