The Texas Tax Reform Commission, created by Gov. Rick Perry, is working to come up with a new tax system that will raise enough money to pay for the state's public schools while at the same time reduce the burden on Texas property owners.
The panel, made up of state business leaders, hopes to make its recommendations in March. We legislators are expecting to be called back for at least a 30-day special session in April. April Castro over at the Associated Press reports that the commission is getting closer to its recommendations.
As she reports the commission is focusing on three potential business taxes to replace a portion of school property taxes. One idea is to expand the current franchise tax to include all businesses except sole proprietorships. The levy would be reduced from 4.5 percent on net income to 1 percent of a business' gross receipts, with deductions for facilities or personnel.
The commission is aiming to reduce property taxes by one-third, from $1.50 per $100 in property value, to $1. To do that, they'll need to find $5.9 billion a year to make up the difference in the school budget. The business tax proposals would need to be coupled with additional sources of revenue, such as an increase on the cigarette tax, or an increased sales tax.
My personal opinion is that the sales tax will be raised a half a cent. That tax would include such services as legal work or interior design that aren't currently taxed.
The commission also is considering an expansion of the current franchise tax, which applies to net income, to capture more businesses. But expanding to other business structures could be a violation of the state's prohibition of a personal income tax. This will be a sticky wicket for the legislature.
All the taxes described is what I believe the legislature will be looking at. I am continuing to speak to my local constituents to see what direction to take on these proposals. I would love to hear from any of you who may be concerned. Please call the office if you want to privately discuss the matter.
The commission had better hurry however because the Texas Supreme Court gave the state a June 1 deadline to come up with a new system.
2 comments:
The first option seems viable to me. Any increase in the sales tax is regressive, and a non-starter for this Yellow Dog. But if we revamp the franchise tax, there must be no exception--none whatsover. If corporate Texas wants an educated work force, they need to pay for it. If they aren't willing to do so, we as Democrats need to call them on it. Above all, don't let Craddick steamroll the process again.
In my campaign for the Texas House of Representatives, I have suggested repealing both the state sales tax and the state tax on residential property.
I believe we should change the state constitution to permit a state income tax and use that as the primary means to fund state spending needs.
I know that the income tax is not a popular idea. I believe, however, that we already have an income tax. After all, where does anyone get the money to pay a sales tax or a property tax? From income!
We can impose an income tax that does not unfairly fall on the working poor, as the sales tax does, and does not unfairly and unwisely tax the American Dream of home ownership, as the property tax does.
By doing so, we can guarantee that the funds will be there to fully fund truly excellent free public education for the future of Texas.
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