Looks like Governor Perry and the Sharp Commission have unveiled their tax plan for the legislature and the citizens of Texas. Early this morning I received a call asking if I would come to our local talk radio station, KURV, and give the local citizens my take on the proposal. I told them I would give it my best shot and immediately drove down to the radio station. For that reason, I wasn't able to give our locals advanced notice of the discussion but was glad to see that RGV Life was able to follow some of the show.
The plan would raise about $5.9 billion for the state's public school budget. The new money would offset losses from giving homeowners a one-third school property tax cut. Now nobody likes taxes and so the discussion can be painful if not boring to some. Davis Rankin who did the interview always has a way to make the discussion exciting.
Now as we discussed, lawmakers are facing a June 1 deadline, mandated by the Texas Supreme Court, to fix the system that the court ruled unconstitutional. If we don't fix the system by the deadline, the court could force the state to stop sending money to the 1,037 school districts in the state.
Most of the proposed new tax money comes from a restructured business tax, namely, a percentage of a company's gross receipts with deductions for either employee compensation or the cost of goods sold. That tax would generate an estimated $4 billion. The cigarette tax would increase from 41 cents to $1.41, bringing about $800 million into state accounts. The plan, crafted by the Texas Tax Reform Commission, proposes using $1 billion from a state budget surplus of $4.2 billion.
As we have previously discussed partners in some our state's largest law firms earning over $300,000.00 may be taxed a thousand dollars for every $100,000.00 they earn. At this moment, a sales tax increase is not proposed but can be expected to come up during floor debate.
Now before you go out with pitchforks and guns blazing remember this tax swap is giving homeowners a one-third school property tax cut. According to the Legislative Budget Board the average decrease would be about 2.2 percent. The largest reduction - 3.3 percent - would go the top 10 percent of families, those with an annual income of at least $146,804. The smallest cut, just under 1 percent, would go to those with incomes between $14,042 and $33,190.
Much of our discussion on today's program revolved around the politics of getting such a proposal passed. With Republicans in a leadership position, many of them will have to bite the bullet and raise taxes, despite their philosophical opposition to such a proposal. At a time of high partisanship, some Democrats will be needed to pass this tax proposal.
As always tough questions have to be fielded from the audience on this most difficult of subjects. As I responded, this is a representative Democracy and I certainly respond to the concerns of the people I represent. Give me a call, a post or a visit and I will take your concerns under consideration. On this issue however it looks like both the D's and the R's are going to be forced to work together if we are going to get anything accomplished. Is bi-partisanship back? Don't hold your breath on that one, but I look forward to the day.
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