Off the Kuff Rotating Header Image

Tax reform on the menu

The Lege, which was too busy slashing public school funding to address the structural deficit caused by the underperforming business tax and the too-big property tax cut, will try to address the issue in 2013.

“I believe that next session there will be substantial tax reform and a broad review of tax policy,” House Ways and Means Chairman Harvey Hilderbran, R-Kerrville, said Wednesday after his committee kicked off the process by discussing tax abatements and exemptions.

The new business tax that lawmakers approved in 2006 during a school reform is not performing as advertised. And, it’s not uniform.

Auto repair shops at car dealerships pay a lower business tax than independent auto repair shops, Hilderbran said. What about on-line retailers who don’t have to collect sales taxes? That costs the state about $1 billion in lost revenue, he said.

House Speaker Joe Straus, R-San Antonio, has instructed Hilderbran’s tax-writing committee to determine whether the state’s business tax should be repealed and replaced with a different business tax. He also wants the committee to assess the impact of the state’s tax structure on the business climate. In other words, how do the sales and franchise taxes and tax exemptions impact capital investment, economic growth and job creation in Texas?

“Everything is before us next session,” Hilderbran said.

He would like to see reform that is revenue neutral – meaning tax rates that don’t increase revenue.

“If we have a more competitive tax code and it results in more economic investment and more economic growth that results in more revenue, I don’t view that as a tax increase,” Hilderbran said.

So, we’re going to seek the One True Tax Code that will spur economic growth and balance the budget by lifting all our boats on a rising tide of prosperity. Good luck with that.

Maybe someone needs to explain what a “structural” deficit is to Rep. Hilderbran, because by definition a “revenue neutral” reform can’t fix it. You either need to make the margins tax bring in more money, or you need to raise revenue someplace else. Perhaps Hilderbran is merely trying to obfuscate that fact to throw off the professional tax-deniers in his party, an effort for which I have sympathy, but I still don’t quite understand what makes a “revenue neutral” tax reform alluring to anyone. I mean, we all realize that “revenue neutral” means “some people will pay more, and some other people will pay less”, right? Maybe in the case of the auto repair shops or something like it, that is suitable, but wouldn’t it make more sense to say “Let’s make sure everyone is paying their fair share”, and leave it at that?

As for making online retailers pay their fair share, you know I’m all over that. What are the odds that will happen while Rick Perry is Governor? For that matter, what are the odds it will happen if Greg Abbott or just about any other Republican prominent enough to win the GOP nomination in 2014 succeeds him? If Hilderbran is serious about this, I support his efforts, but I’m not holding out much hope.

Related Posts:

Comments are closed.