Still having budget woes in the Senate

The Legislative Budget Board has released its analysis of the Senate budget plan, and whatever improvements said budget may contain over the House plan, the same basic flaws still exist: it's a tax cut for a few, and a tax hike for everyone else.

Only households with incomes of more than $140,853 a year would realize a net tax cut — an average of 1.52 percent — under the swap of higher state taxes for lower school property taxes in fiscal year 2007, when the trade-off is fully in place.

[...]

Senate Finance Chairman Steve Ogden, R-Bryan, the bill's sponsor, blamed much of the inequity on a 75-cents-per-pack increase in the cigarette tax, which is part of the package. On average, poor people who smoke spend a larger share of their income on cigarettes than wealthier people.

"Obviously, I'd like to see it (the analysis) a little bit different. (But) get rid of the cigarette tax, and the equity note would change substantially, particularly in the areas of the lowest income," he added.

Ogden said he isn't willing to concede that the bill won't offer tax relief for many Texans.

But Sen. Eliot Shapleigh, D-El Paso, a strong opponent of the bill, called the tax trade-off a "historic shift to radically regressive taxes."

"All this debate has been about tax cuts for the wealthy," he said.

[...]

According to the analysis, families earning more than $140,853 a year would see their taxes reduced by a collective $212 million, or an average of 1.52 percent, in 2007.

All other income categories would get a net tax increase. Overall, that would mean a tax increase for 80 percent of Texas families, said the Center for Public Policy Priorities, which advocates for middle- and low-income people.

Families with annual incomes of $64,325 to $79,271 would pay a total of $136 million more in taxes, an average increase of 2.41 percent per family. Total taxes would jump by $122 million, an average of 4.1 percent, for families in the $22,833-$31,735 range.

Families in the poorest category, $13,415 a year or less, would pay $8.1 million more in taxes, collectively, for an average boost of 0.4 percent.

The Statesman's Postcards From The Lege blog has been on this - see here, here, and here. The first link makes the point that Sen. Ogden raised as well:

It’s important to remember these are average increases. The Senate plan increases cigarette and alcohol taxes significantly, so if you don’t smoke and don’t drink you might be spared the increases.

But it's also important to remember that only homeowners will see any kind of tax cut at all, so if you're a renter (to whom the Lege will not be requiring any property tax savings to be passed) the best you can do is break even; if there's any increase at all in the overall sales tax rate, you lose for sure. Smokers, drinkers, car and boat buyers, and perhaps other groups like donut eaters, will really take it in the shorts. What happens if people cut back on cigarettes and beer? Why, the budget gets thrown all out of whack again. Hey, this was so much fun this time around, why not ensure another go-round?

The Senate will be debating this sucker today and tomorrow. Will they be able to resist whining business groups and their complaints about the overhauled franchise tax? Will they sustain any attacks from Comptroller Strayhorn? Will someone cave in and suggest once again that maybe more gambling is the answer? Tune in and find out.

Posted by Charles Kuffner on May 10, 2005 to Budget ballyhoo | TrackBack