Off the Kuff Rotating Header Image

tax cuts

Rally against the GOP tax scam

Are you upset about the terrible tax giveaway passed by the Senate last week? (If you aren’t, you should be.) Here’s one action you can take to channel those feelings.

Rally Against Robbery! The People Fight the Tax Scam.
Hosted by Indivisible Houston and Tax March – Houston.

Wednesday at 6 PM – 8 PM
Houston City Hall
901 Bagby St, Houston, Texas 77002

The #GOPTaxScam just robbed The People right in front of the watchful eyes of the world. By ramming a partisan package full of anti-poor provisions down the collective throats of the masses, 45 and his gang of congressional thugs have declared war on hardworking taxpayers and every single person who makes up the American social fabric, and we have had ENOUGH.

Join us to fight back as Congress seeks to reconcile its dueling versions of robbery and deliver a giftwrapped heist to mega-corporations on the backs of working class and middle class families, just in time for Christmas.
The Rally Against Robbery will include an extension of The People’s Filibuster, an auctioning off of each of our individual Houston area Congressional reps to finance the programs they have attempted to cut, and a united front against the worst legislation to hit reconciliation committees in decades.

Join if you can, but whether you can or you can’t, remember that the bill hasn’t received final passage yet. There’s still a need to fight, which means a need to call your Congressperson and Senators and tell them what you think of this abomination. And then of course vote out all of ’em who supported it.

Sunsetting tax expenditures

Sens. John Carona and Rodney Ellis have the right idea.

Sen. John Carona

Over the past 18 months, many of our constituents told us they have trouble finding a reliable, accurate and up-to-date source of information on these tax breaks, exemptions and special treatments — often called tax preferences or loopholes.

Unfortunately, so do we.

The Legislature makes extensive efforts to determine the efficacy of every state dollar spent in our public education, health and human services, and criminal justice systems. With that data, elected officials can weigh the costs and benefits of different policy options in an attempt to make the most well-informed decisions. Yet we still have an astounding deficit of knowledge when it comes to tax expenditures.

Sen. Rodney Ellis

This session, we aim to change that. We have filed Senate Bill 140 — bipartisan legislation to scrub, sunset and possibly repeal scores of preferential tax breaks in Texas law. State agencies are subject to a sunset review every 12 years to determine if their functions need to be continued or reformed. The tax code would benefit from a similar periodic review of all its tax preferences to answer a simple question — are they working?

The Texas Tax Code contains numerous tax loopholes, many of which were inserted into the code in the distant past but live on long past the time the rationale for their existence has ended. Recent press reports estimate that, at a minimum, Texas spends $19 billion annually on these incentives. Yet despite this price tag, state agencies responsible for Texas’ finances are unable to provide a comprehensive list of tax preferences, much less detailed analyses. The sad fact is that the state agencies responsible for Texas’ finances are unable to determine exactly how many of your tax dollars are spent on tax loopholes, because no one even knows how many are in the tax code, how much they cost, or if they are even working.

Our ongoing budget challenges demand that we be as prudent as possible with all of our tax dollars, yet the state lacks a basic method to review and determine the effectiveness of a host of tax preferences and incentive programs. Texas needs a consistent, thorough review process to provide the public and policymakers alike with information on tax preferences’ successes and shortcomings.

Here’s SB140, which is enabling legislation for SJR12. There was some talk about taking a closer look at tax expenditures in 2011, but it never went anywhere because spending cuts were the be-all and end-all of everyone’s existence. I’m hoping for a bit more sanity this session, but if this has to be done as a Constitutional amendment that will make it a much heavier lift. Still, this is clearly an idea whose time has come – as they note, several other states do this already – so I wish them the best of luck with it. Link via Better Texas.

On a related note, Sens. Carona and Ellis’ timing on this is propitious given the push by their colleague Dan Patrick for a brand new tax expenditure gimmick, his proposal to fund private school tuition vouchers via a business tax writeoff. Former Deputy Comptroller Billy Hamilton makes short work of that.

Setting aside the effects on public education, the tuition credit idea should be rejected as a matter of tax policy alone. Education is important, but what makes this particular program worthier of tax breaks than donations to a thousand other good causes? What makes this cause more worthwhile than donations to public schools? Why this tax break and not others? There are no good answers.

We don’t know what a Texas version of this corporate tax credit program would look like or who will benefit, but whatever shape it takes, we need to keep in mind the experience in other states. States such as Florida, Pennsylvania, and Georgia have all had problems with the programs at various times because they’re designed with little or no public accountability. Companies should be free to donate money to private nonprofits if they want, but if the donations effectively come out of the state treasury, my 30 years around government tells me someone better be following the money because scandal will happen eventually.

Hamilton sure is a busy bee these days, isn’t he? Anyone who thinks Patrick’s proposed scheme would not be leveraged by people who already do send their kids to private schools or who always were going to send their kids to private schools – something that’s already happening in Louisiana – I’ve got some beachfront property in Lubbock for you.

The tax question

So Bill White gave a straightforward answer to a question about taxes, and everybody goes nuts. Well, Rick Perry and his minions went nuts, and everybody else followed.

The former Houston mayor, asked by the Tribune’s Evan Smith whether he would rule out tax increases in the face of looming budget shortfall, declined to do so. Perry pounced — attacking just like Hance and Richards and countless others before them. Perry himself wasn’t doing the talking, but his campaign had previously issued a demand for White’s income tax returns and added the charge that he had opened the door for higher taxes should he win in November.

This is as much about how the race for governor will be run as it is about taxes. Perry is relying on an established argument and traditional voter expectations. One ally, who worked on the Williams campaign 20 years ago, put it this way: “You have to do a few things when you run for office in Texas. You have to debate. You have to release your tax returns. And you have to say you won’t raise taxes.” White’s trying to change the way the argument goes.

“What I did when running for mayor of Houston is I never committed to whether I would raise or lower taxes,” he said in the TribLive interview. “I would say the same thing, that I’ve got to look under the hood and see how the economy is at the time, and make sure that we’re able, that the revenues equal the expenses, and that I would do everything possible in order to maintain fiscal discipline on the revenue side. Period. … I did not commit to do it because until you look under the hood and see what you can do and what the state of the economy is and what the tradeoff is, you shouldn’t be making that decision. That decision shouldn’t be made on the basis of a sound bite or a political ploy. It should be made on what you need in order to accomplish your goals.”

I admire White for not backing down, though I would have liked to have heard more about the state’s structural deficit and the need to deal with that. Sadly, the nature of our discourse is such that these things are considered taboo. Perhaps the best we can do is to get a thorough accounting of the tax breaks and other goodies that are currently on the books to see which of them might safely be eliminated. There’s a bipartisan push for that going on in Washington, and the subject has come up here as well. That won’t get a handle on the underlying problem, and the odds of any specific tax break actually getting eliminated are directly proportional to the amount of power the affected beneficiaries wield, but at least it’s something.

John Cornyn: For deficits before he was against them

There are many ridiculous things about our political discourse these days. Among them is the discussion of long-term federal budget deficit projections, in which the vast majority of Republicans, especially those who have been in office for more than a few years, are doing their best to deny that the Bush Administration ever existed. Take, for example, our junior Senator, John Cornyn.

Matt Yglesias does good service by reminding us of the 2003 Senate vote on Medicare Part D, the budget-busting prescription drugs for seniors bill that passed the Senate 54-44, even though it wasn’t paid for (it adds trillions to the deficit over time). Here’sthe vote: it is interesting to note that the two Gang of Six members who are the most prominent naysayers and budget hawks on the Senate Finance Committee now, Chuck Grassley and Mike Enzi, voted for the bill. As did assorted other noisy conservatives like Sam Brownback, John Cornyn and John Kyl. What irresponsible spendthrifts!

And that’s without taking into account the ginormous and fantastically reckless Bush tax cuts of 2002, which have drained the federal coffers of cash while fattening up the households at the top 0.1% of the income scale, and our grand adventure in Iraq, whose total outlays so far exceed the stimulus package that Cornyn and his ilk so bitterly complained about. Keep all that in mind when you hear Cornyn and his allies in Congress, the punditocracy, and the right-wing blogosphere whine about the cost of health care reform, which among other things is paid for and deficit neutral. They have no credibility at all. Thanks to Steve Benen, who notes some further hypocrisy on the GOP’s part, for the link.

The city’s current budget situation

With the way the economy has been over the past year, we shouldn’t be surprised that the city of Houston is facing a revenue shortfall – the same thing is happening at the state level as well. The question is how are we going to deal with it.

“The city of Houston’s finances are in good shape,” [Mayor Bill White] said at a news conference Monday, noting Houston has weathered a hurricane and a global financial crisis. “We’ve been tightening the belt with plans this month. We can do so without compromising essential city services, although there will be some tough choices … I’m confident we’re going to close this gap, although it will take financial discipline.”

Those tough choices could include charging people who do not recycle according to the amount of garbage they send to landfills, White said, or closing Brock Park golf course, a city-run enterprise that loses $500,000 a year and that brought controversy when City Council passed the $4 billion budget in June.

Other possibilities include selling off real estate; delaying some expenditures on technology and new helicopters for police; cutting positions in certain departments; or seeking quicker reimbursements from insurers or the Federal Emergency Management Agency for costs associated with Hurricane Ike, according to a memo White sent City Council members Monday.

Isiah Carey and Mary Benton had more on this yesterday. Does this mean that some of those task force recommendations from 2007 on waste reduction might get implemented? Some of that, along with a “pay as you throw” scheme for trash pickup, would be a positive thing to come out of this.

The mayor took umbrage with City Controller Annise Parker’s statement in her monthly financial report, which will be presented to a City Council committee today, that the city has a $103 million budget shortfall.

About $50 million of that was already built into the budget as a drawdown from a surplus “fund balance” that White said he built up in five-and-a-half years as mayor for trying financial times such as these.


Parker said her characterization of the city’s financial state was accurate, since the most current estimates show expenditures exceeding revenues by $103 million.

“We are not immune to the economic realities that are affecting this country,” she said. “While we have budgeted carefully with a close eye on the bottom line, in this newly passed budget the revenue has come in less than anticipated, and adjustments are going to have to be made. That will involve spending cuts.”


In order to preserve a position of financial security, which is a key factor in its bond rating, the city must maintain at least $126 million in reserves. Without using cuts or other means to close the gap, the city will come within only a few million of that key figure.

White said raising the property tax rate is off the table.

More here. It’s election season, and I understand that nobody wants to talk about taxes in any context other than reductions at times like this. But honestly, why is there no consideration being given to raising the property tax rate by a tiny bit? For every year of Mayor White’s term except for this one, the budget included a small cut in the property tax rate. In 2008, for example, the rate was cut by half a penny, with the reason given that times were good and we could afford it. Well, times are bad and we can’t afford it any more. I don’t know how much revenue that lower tax rate has kept out of the city’s coffers, but I do know that a proposed one cent tax cut for Harris County would have cost $25 million in revenue, while saving the average homeowner a whopping $12 a year. How much would the city’s rate have to be raised, and how much would it cost the average homeowner annually, to cover this shortfall and prevent any further cuts in city services? I’m betting the answer is “not much” to both. So why is this not on the table? Why are all these cuts being considered first? It makes no sense to me.

All I’m saying is that if all options really are being explored, then this has to be one of them. Tax cuts have become basically an entitlement these days, and it’s just not sustainable. Sooner or later, we need to recognize this.

The reason we need a credible Democratic candidate for Governor, in a nutshell

In case you missed it, the far right wing Sen. Jim DeMint of South Carolina offered an amendment to the economic stimulus bill during all the sausage-making last week. Here’s what he proposed:

o Permanently repeal the alternative minimum tax once and for all;
o Permanently keep the capital gains and dividends taxes at 15 percent;
o Permanently kill the Death Tax for estates under $5 million, and cut the tax rate to 15 percent for those above;
o Permanently extend the $1,000-per-child tax credit;
o Permanently repeal the marriage tax penalty;
o Permanently simplify itemized deductions to include only home mortgage interest and charitable contributions.
o Lower top marginal income rates from 35 percent to 25 percent.
o Simplify the tax code to include only two other brackets, 15 and 10 percent.
o Lower corporate tax rate as well, from 35 percent to 25 percent.

In other words, take everything that was done during the Bush years and double down. Note that there’s not a single dime of spending, just tax cuts galore, which will surely come as a great relief to everyone who is currently unemployed and/or uninsured. Note also that this would mean not a dime for beleaguered states, who collectively face over $40 billion in budget shortfalls, which if left unaided (as things depressingly stand now, thanks to the “work” of such “moderates” as Ben Nelson and Susan Collins) will likely lead to massive cuts and layoffs of teachers, police officers, and the like. Including states like Texas, which we know is already gearing up for cutbacks.

That the Republicans have gone completely crazy, and have turned into a group of utter economic illiterates, is hardly surprising. But note that DeMint’s amendment got Yea votes from 36 of the 41 Republicans in the Senate. Among them is that supposed sensible moderate centrist Kay Bailey Hutchison, who is apparently unwilling to cede the wingnut vote in the GOP primary to Rick Perry. In a just world, a vote like this would be firmly wrapped around her neck, in a nonstop barrage of TV and radio ads, by her eventual Democratic opponent, assuming that she does in fact win her primary. If only such a person existed.

Expect her to make more votes like this between now and next March, by the way. Winning that primary is more important than representing Texas’ best interests. If, as she no doubt hopes, the election will essentially be decided by 600,000 or so voters who don’t really care that much about Texas’ best interests, what has she to lose by acting this way?