The LBB analysis hits the news

Here are the headlines for stories about the Legislative Budget Board's analysis of the awful House Bill 3.

Chron: Tax bill called best for richest

Express-News: Tax bill has silver lining for richest

Statesman: Study finds poor Texans would bear brunt of tax changes

Star-Telegram: Study: House bill would raise most Texans' taxes

Morning News: Analysis: Tax bill would benefit richest

Is it just me, or is anyone else detecting a theme here?

Here's the Republican response:

Rep. Jim Keffer, R-Eastland, author of the tax bill, said he believes the tax impact analysis is accurate.

"Facts are facts. I don't dispute the LBB numbers," Keffer said.

But Keffer said he believes the legislation provides benefits to low-income people by creating a tax atmosphere where businesses will invest in higher-paying jobs and by lowering property taxes for both businesses and individuals.

"One of the impediments to homeownership is property taxes," he said.

Personally, I'd rank "ability to save up enough to make a down payment" and "sufficiently good credit rating to qualify for a mortgage" ahead of that, but whatever. How HB3, which Keffer admits will stick it to the lower income brackets, will help anyone on either of those two items is a mystery to me.

But don't worry. The House GOP did give us the Doughnut Tax:

[HB3] would raise the state sales tax rate from 6.25 percent to 7.25 percent and put a "snack tax" of 10.25 percent on chips, cookies, doughnuts, candy, nuts and soft drinks unless the items are bought in a restaurant. There also would be tax increases on boat and auto sales, and a $1-a-pack increase on cigarettes.

Why does Jim Keffer hate Homer Simpson?

There is one other item that supporters are hanging their hats on, as noted in the Express-News:

Even some who see a problem with that, however, pointed to a separate economic analysis by Comptroller Carole Keeton Strayhorn. Her analysis states that in 2010, the bill could be expected to generate 80,600 jobs, $4.2 billion more in personal income and $6.3 billion more in investment.

I'm looking at the Comptroller's homepage and I don't see a link to any such study. If I'm missing something, please let me know. Of course, as with the previous claims of "revenue neutrality", the key here is the distribution of that personal income - if it's all going to that top 10%, then we still have the same problem.

Who knows if this plan will even pass? As the Statesman notes, there's fairly broad opposition to it:

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 the Morning News notes, even the conservative Texas Public Policy Foundation dislikes HB3:

[Michael Quinn Sullivan of the Texas Public Policy Foundation] said the payroll tax would eliminate jobs filled by unskilled, poorly educated Texans. Under the bill, the existing business franchise tax would be repealed and all businesses would have to pay 1.15 percent of each employee's salary, up to $90,000 per worker annually.

Mr. Sullivan said the House should have considered alternatives such as expanding the sales tax to services provided by stockbrokers, travel agents and interior designers, services that "people at the lower end of the economic scale don't use."

As we know, those very proposals came up in 2003 but were shot down. Whatever their flaws, they're still better than the Doughnut Tax.

We finally have a pronouncement from on high in the Governor's office, according to the Statesman:

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."

In other words, 'tis better to pass something bad in a timely fashion so we can get out of here than to take the time and do it right even if it means drawing the process out. I stand in awe of his leadership skills.

Finally, Rick Casey notes an irony to all this:

[Ruth Duque], 28 and married to a freelance construction worker, is a cafeteria worker serving students at Sam Houston High School.

She works full time for $12.42 an hour. Her take-home pay is $645 every two weeks.

It used to be nearly $90 a paycheck less, but she gave herself a raise.

By dropping her health insurance.

"My paycheck was getting so small," she said after closing down the midday food line one day last week. And gasoline and other expenses kept going up.

Her husband doesn't have insurance, and she has diabetes.

[...]

For years, the state has shrunk its share of the cost of education, loading the burden onto local property taxes. Last year, HISD countered to an extent. In 2004, HISD saw a much larger number of lower-income employees drop their insurance. An important reason was that HISD encouraged them to.

We pay many of the people who serve our children so little that they qualified for the state's Children's Health Insurance Program, or CHIP. So school district officials gave workshops and presentations showing eligible workers with families that they would get a better deal with CHIP than with the private insurance company.

This saved the district money, as well, and helped account for a tripling of waivers of health insurance over the previous year.

Then the state cut CHIP eligibility, leaving many of those school workers and others out in the cold.

After a statewide outcry, legislators expect to restore much of CHIP. And, they say, they are going to increase the money going to the schools while cutting local property taxes.

How are they going to do this?

According to an analysis of the latest House bill by the staff Legislative Budget Board, by raising Ruth Duque's state taxes by about 5 percent.

Indeed.

Posted by Charles Kuffner on March 09, 2005 to Budget ballyhoo | TrackBack