Texas voters will decide in November if they want to bar the imposition of an income tax, following approval of the constitutional amendment by the state Senate on Monday.
The Texas House had approved House Joint Resolution 38, which prohibits the imposition of an individual income tax, earlier this month.
The seemingly anodyne proposal ran into pushback Monday from some Senate Democrats who suggested the bill could cut business taxes, a major source of state money.
There appears to be no threat of an income tax currently — no such bill appears to have been filed, let alone have reached the floor of either chamber, where it would be political kryptonite. And a 1993 constitutional amendment already holds that Texas can adopt a state income tax only if voters approve and that the money would go for the “support of education.”
But Senate Democrats on Monday sparred with Republicans over a seemingly arcane bit of language that could carry big budget implications.
The resolution says that the Legislature may not impose a net income tax on “individuals.”
Democrats, pointing to an analysis by the state’s nonpartisan Legislative Budget Board, said that could be interpreted by courts to apply to businesses, especially because the measure’s language uses that term rather than “natural persons,” which is often used in statutes.
The business levy, long a target of Republicans eager to shave taxes, brings in about $8 billion per biennium, helping to fund public schools.
“The term ‘individuals’ is not defined and could be interpreted to include entities that are currently subject to the state’s franchise tax,” the Legislative Budget Board analysis reads. “To the extent the joint resolution might exempt some entities from the franchise tax, there could be a loss to state revenue.”
Earlier during the debate, [author Sen. Pat] Fallon said the constitutional amendment would firm up the state’s opposition to income tax.
“I’m always in fear of an income tax,” he said. “Every day I wake up, the thought of Texas having an income tax makes me shudder. Physically shudder, not metaphorically.”
Seriously? Mere words cannot adequately express my reaction to Sen. Fallon’s delicate sensibilities, so mark me down as being somewhere between here and here. I do hope you sleep better tonight, Senator, and if not I recommend warm milk and a bedtime story, preferably one with a happy ending. As for my reaction, here it is:
“Why would pesky LBB fiscal facts be any help when discussing a major source of state revenue for schools?” Eva DeLuna Castro, a budget analyst with the left-leaning Center for Public Policy Priorities, wrote on Twitter. “I mean, it’s not as if major business conglomerates have highly paid tax lawyers waiting in the wings to explain why they are ‘individuals’ too.”