Off the Kuff Rotating Header Image

Here come the tax cut proposals

When the sunny revenue forecast came in, we immediately got one crappy tax cut idea, to eliminate the margins tax at a cost of $4.5 billion. The Texas Association of Business didn’t care for the idea, at least at first, but are now warming up to it, because this is what they do.

For Bill Hammond, president of the Texas Association of Business, it’s a simple formula: Keep taxes low and the Texas economic engine keeps on chugging. Hammond says making permanent the business tax exemption for companies that bring in less than $1 million in gross receipts would fuel the economy, as would allowing those making more than that to exempt their first $1 million.

“Currently if you do $900,000 in receipts, you pay no tax,” Hammond said. “If you have $1.1 million in receipts you pay tax on the entire amount.”

With a million-dollar exemption, the latter company would pay taxes on just $100,000.

Hammond also wants to lower the franchise tax rate by a quarter of a percent. And lest consumers feel left out, the proposal includes a sales tax exemption for college textbooks.

[...]

Hammond’s proposals would cost the state more than $4 billion, money he says should be off limits to lawmakers, because spending it would put the state over a constitutional cap on state budget growth.

“Unless there’s a vote of two-thirds of both bodies to bust the constitutional cap, that money will either be sitting in the treasury forever maybe, or, as we believe, it should be returned to the taxpayers,” he said.

But Hammond’s numbers don’t exactly add up. The $4 billion would be off limits based on the current size of the 2012-13 budget. But lawmakers are expected to add about $7 billion to that budget in a supplemental appropriation early this spring. That would increase the cap for the new budget and erase that $4 billion overage.

Hammond calls his proposal a starting point and expects more tax cut ideas in coming weeks.

Well, the margins tax was born on fuzzy math, so it would be somehow poetic if its demise began with more fuzzy math. The Statesman has more:

Hammond said the rate cut proposed by TAB could be the the first step in phasing out the franchise tax.

Until the latest revenue forecasts, Hammond had said he doubted the state would have the revenue to phase out a franchise tax that has accounted for about 10 percent of all state tax revenue. But he said Texas Comptroller Susan Combs’ forecast for the next two years changed his mind.

“We needed to see how much money was available,” Hammond said. “There’s money to fund some or all of it.”

Dick Lavine with the Center for Public Policy Priorities, which advocates for low- and middle-income families, disagrees.

Lavine said state funding for education is $500 per student less than before the 2011 cuts. He also noted Texas’ needs for water and transportation infrastructure.

Although the Legislature is expected to be even more conservative this year than in 2011, Lavine said he’s begun talking to GOP lawmakers and they aren’t in lock step for tax cuts.

“Not all of them are enthusiastic about tax cuts because they realize the state has higher priorities,” Lavine said.

Priorities, remember those? You know, like water and transportation and Medicaid and weaning the budget off of accounting tricks and paying off all those bills the Lege deferred from 2011. Those things. Oh, yeah, and public education, which the Lege won’t address this session beyond maybe funding enrollment growth but which Lt. Gov. Dewhurst wants to set some money aside in anticipation of a court ruling that more must be spent. This is why if you think in terms of what Texas actually needs, we’re falling well short of what we should be spending. Even without that, it’s hard to see where the room for a multi-billion dollar extravagance like this comes from. You can pay for the things Texas needs, or you can throw a bunch of money down the tax cut drain. You can’t do both.

And as a reminder, it’s not just the big ticket items that are clamoring for their fair share of the pie, it’s the smaller line items, too.

The Texas Parks and Wildlife Department would close seven state parks during the 2014-2015 biennium under preliminary budget proposals from the House and Senate, and at least one group is ready to fight to keep them open.

In discussions before the legislative session began, the parks and wildlife department requested that the Legislative Budget Board allocate an additional $18.9 million from the sporting goods sales tax to keep all parks operational. The preliminary House and Senate budgets, released Tuesday, call for only an additional $6.9 million over the next biennium from that tax.

Ian Davis, the directof of Keep Texas Parks Open, said parks improve Texans’ quality of life and stimulate local economies, especially in smaller counties. His organization will hold town hall meetings around the state and organize Texans online to advocate for additional funds so the department can keep all its parks open.

“We are trying to mobilize people across the state so they understand that it could be their park that closes,” Davis said.

Here’s their Facebook page if the idea of not spending less than 0.1% of the revenue we have to keep Texas’ parks open offends you. We have a choice to make. We really ought to try to make a good one.

Related Posts:

Comments are closed.

Bookmark and Share