State GOP Works to Shaft Texans Making Under $100,000

You think consumers are getting the shaft on the national level? Texans should pay more attention to what the Republican Legislature is busy trying to do to them...


79th LEGISLATURE

Study finds poor Texans would bear brunt of tax changes

By Mike Ward, W. Gardner Selby
AMERICAN-STATESMAN STAFF
Wednesday, March 09, 2005

As House members publicly fought Tuesday over how to fund and manage schools, cracks began showing in efforts by Republican leaders to enact a multibillion-dollar tax plan to pay for proposed cuts in property taxes.

Fueling the growing dissent over the tax bill was a new state study that showed that the tax burden would increase for households earning $100,000 a year or less, even after taking into account proposed property tax cuts approved this week by a House committee.

In a surprise move, Gov. Rick Perry warned publicly that a defeat of the tax plan, House Bill 3, would prompt a special legislative session, a message he acknowledged was intended to "keep the process moving" by securing House approval of a plan, any plan.

"The most important part of what's going on right now is to move the process forward, not to kill this," Perry said, noting that the Texas Constitution prohibits action on any measure that has the same substance of a proposal already voted upon.

"If you kill it now, you don't get to take it up again. You're through. You don't get another chance at it until a special session. . . . We don't need to do that. We need to move the process forward."

House Speaker Tom Craddick, R-Midland, echoed that conviction last week in discussions with business groups and Sunday in a closed-door meeting with the House Republican Caucus as he courted support for the House tax plan, according to people who attended the sessions.

Some business groups and conservative activists worked feverishly behind the scenes Tuesday to defeat the House tax plan — a bill that would replace the current franchise tax with a new payroll tax; expand sales taxes to include newspapers, auto repairs and bottled water, among other things; and impose a 3 percent tax on snack foods.

Bill Hammond, president of the Texas Association of Business, the state's largest business group, said its executive committee failed to reach agreement on the plan Monday, meaning it has no position on its approval or rejection.

"You can draw your own conclusions," Hammond said.

Bill Allaway of the Texas Taxpayers and Research Association, who testified recently in favor of a committee version of the tax plan with reservations, said groups representing a range of business types have understandable difficulty giving "unequivocal" support to any plan.

Emblematic of the growing disquiet was this take on the topic e-mailed Tuesday to about 17,000 Texans by conservative activist Jim Cardle of Austin. Calling the payroll tax "a recipe for disaster," he said, "it stinks. It's going to kill jobs. It's a hidden income tax."

As part of the behind-the-scenes maneuvering on the bill, Craddick sought a letter last week from several groups representing business interests. By Tuesday, just two days before debate on the tax bill could begin, the letter still had not been delivered.

Ron Dipprey of the Texas Chemical Council said there has been concern that the plan favors big companies and hurts small ones.

"We want to do it in a way that reflects a diverse cross-section of business," Dipprey said. "The speaker will ultimately have to decide if he wants the letter."

A draft of the letter, obtained by the Austin American-Statesman, calls the tax plan "a meaningful first step in the process of building an effective, balanced tax system that is better able to support the growing needs of our state."

As debate continued into the night Tuesday on changes to school funding formulas, House Bill 2, Republican leaders were working with several heavyweight business groups to push the tax bill through with the payroll tax included.

Nose counting in the House indicated that the vote will be close. It takes 76 votes in the 150-member body to pass legislation.

In its new study, the Legislative Budget Board calculated that the proposed tax changes would increase the amounts paid by a large percentage of Texas families. On average, only families with incomes of more than $100,000 a year would save more from the proposed property tax cuts than they would pay in higher sales and cigarette taxes, or absorb in lower wages because of the payroll tax.

In its analysis of the proposal, the Center for Public Policy Priorities, an Austin think tank, said Texas would have the "highest state sales tax rate in the nation": 7.25 percent, a full penny more than the current tax.

"HB 3 would appreciably increase the regressivity of Texas' tax system by increasing the tax load on lower- and middle-income families, while decreasing the taxes paid by upper-income families," the center's analysis said.

A separate analysis from Comptroller Carole Keeton Strayhorn showed that HB 3 would help create 48,000 jobs by 2007 and 80,600 jobs by 2010. In addition, the bill would boost personal income in Texas by $4.16 billion by 2010.

By contrast, Strayhorn's office on Friday found the House's original tax plan to be more than $1 billion short of covering the cost of the proposed school property tax cuts, leading the tax-writing Ways and Means Committee to raise the proposed sales and payroll taxes and to suggest the snack tax late Monday.

Ways and Means Committee Chairman Jim Keffer, R-Eastland, defended the plan Tuesday as a job-creator that will allow all Texans to prosper.

"If we're helping people either expand in Texas — job-wise, business-wise — or relocate in Texas where they're creating jobs hopefully with good benefits . . . if we're successful, I think we all prosper," Keffer said.

Effective tax rate change under House Bill 3

The proposed state budget would increase the effective tax rate for all households by 1.24 percent, but households with lower incomes would see a larger increase.

Family income Percent change
.........$0 to $13,415 +5.57
$13,415 to $22,833 +5.18
$22,833 to $31,735 +4.96
$31,735 to $41,463 +4.63
$41,463 to $51,750 +4.31
$51,750 to $64,325 +3.75
$64,325 to $79,271 +2.68
$79,271 to $100,593 +1.66
$100,593 to $140,853 -0.47

...above $140,853 -2.87

Source: Legislative Budget Board
http://www.statesman.com/news/content/shared/tx/legislature/stories/03/9TAXFIGHT.html




Even the normal supporters of the state Republican Party are divided over the issue, although for different reasons. What is going to happen to average Texans, even those in the Middle Class who are doing pretty well, is a higher tax bill, one that is extremely regressive. For those who don't understand "regressive," that means the less money you earn, the more you will be taxed.

I hope Dewhurst and the State Senate can change this bill considerably. We'll see.

Keep D&D Civil!!

 

Hey, at least you're interested.
I miss mrpaige. He was always good for a state political discussion, even if we disagreed half the time, or more. (probably more- )

It's amazing that we are fixing to have the highest sales taxes in the country, which you will see everywhere, from the 7/11, to when you buy a car, and the public appears oblivious. Hey, we are going to save some bucks from this proposed deal, but I'm still dead-set against it.

Just amazing... are Texans collectively asleep??

This is from the Fort Worth Star-Telegram editorial, courtesy of Bill Bishop, aka "Lasso," who does an excellent job covering politics, with a personal touch, for the Austin American-Statesman[/:]:

The Legislative Budget Board has reported that HB 3, if adopted, would reduce net business taxes by $235 million in fiscal 2007, but individuals would end up paying $448.9 million more. The bill would benefit individuals with incomes of more than $100,593 but would increase the effective tax rate on the lowest-income Texans by as much 5.57 percent.

Texans simply cannot accept a new tax policy that would take money from their poorest neighbors while putting dollars in the pockets of the already well-off and in business bank accounts.

http://www.statesman.com/metrostate/content/custom/blogs/lasso/index.html


The Dallas Morning News had a big cover story on this a day or two ago, as did San Antonio's paper, the Houston Chronicle, and others around the state. Is anyone paying attention? This is going to have a huge impact on most Texan's pocketbooks. If you are a Texan, this means you!





Keep D&D Civil!!

 

Max, I'm not crazy about my property taxes... Austin has some of the higher property taxes in the state, and certainly some of the highest property evaluations... I just think any reform should be fair, and this "plan" is totally skewed towards those making over $100K.

This is from this morning's Statesman:


EDITORIAL
Tax relief for those who need it least

Report on tax equity from the Legislative Budget Board
Get Acrobat Reader

EDITORIAL BOARD

Saturday, March 12, 2005

At least one aspect of the tax bill now before the Texas House is deeply unfair to most Texans — those living in households with incomes under $100,000 a year.

Under the legislation, House Bill 3, households with annual incomes of more than $100,000 would get a net reduction in taxes totaling $437.2 million a year. In fact, most of that — $400.5 million — would go to households with income of more than $140,000 a year.

But the 80 percent of Texas households that make less than $100,000 would pay $1.1 billion more each year in taxes. Worse, the less a household makes, the higher its net tax increase.

Those with incomes of less than $31,735 a year — 30 percent of all households — would pay about 5 percent or more per year.

This from a bill whose caption describes itself, in part, as "relating to property tax relief and protection of taxpayers . . ." That description is accurate — if your household income is more than $100,000.

The figures are not our estimates. They come from the staff of the non-partisan Legislative Budget Board, a state agency. They take into account the net effect of the bill's proposal to cut property taxes, raise and expand the state's sales tax, raise the cigarette tax and enact a new payroll tax on businesses.

This is not a criticism of higher taxes in general. State government is not spending enough on a number of services, especially public education, and it is appropriate that all but the poorest Texans help carry the load.

That's especially so given that Texans bear one of the lightest combined state and local tax burdens in the nation.

But it's not right that, in raising and restructuring that tax load, the wealthiest 20 percent of households could end up with a net tax cut while the other 80 percent pay more.

As we have proposed before, adoption of a modest income tax would allow the state to cut property taxes, not raise the sales tax and spread the tax load more fairly.

The House tax bill has the laudable purpose of trying to ease the property tax burden. But House Speaker Tom Craddick is ramming through a half-baked piece of legislation.

Besides skewing all the effective tax reduction to those with the highest incomes, the bill has bogged down in House debate over an amendment to give businesses a choice between paying a payroll tax or a franchise tax.

Yet no one on Thursday could provide definitive answers on what such a change would mean in tax revenues, and after returning to try again on Friday, Craddick gave up and adjourned until Monday.

We hope over the weekend lawmakers will give some thought not only to the concerns of businesses and their lobbyists, but to the unfairness of delivering tax relief to those making the most money while jacking up taxes for everyone else.

http://www.statesman.com/opinion/content/editorial/03/12taxes_edit.html

Keep D&D Civil!!