The Texas House tentatively approved a $4.9 billion tax relief plan Tuesday that includes a cut to the state’s sales tax, marking a clear line in the sand against the Senate, which favors property tax cuts.
The House voted 141-0 for House Bill 31 by Ways and Means Chairman Dennis Bonnen, R-Angleton, which would cut the state sales tax rate from 6.25 percent to 5.95 percent. If the bill reaches the governor’s desk, it would be the first cut in the state’s sales tax in Texas history.
Bonnen presented his sales tax cut as more impactful than the Senate’s proposal, which would increase homestead exemptions to lower local school property taxes. The Legislature passed an even larger property tax cut in 2006 that was widely viewed as underwhelming by homeowners due to increases in property values and local tax rates.
“A sales tax cannot be eroded by a local tax hike or rising appraisals,” Bonnen told the House. “We would be using our tax dollars for a tax that we control.”
My personal choice would be to invest this money in education, infrastructure, shoring up the pension system, that sort of thing, but you know what they say about elections and consequences. If we have to cut taxes, I’ll take the sales tax cut, as it’s more progressive and doesn’t require advanced shenanigans with the spending cap. But let’s keep things in perspective here. What this cut means is that if you spend $100, you will save a grand total of thirty cents on your sales tax – instead of paying $108.25, you’ll owe $107.95. The claim is that this cut will save the average family something like $170 per year, well to get that amount of savings that family would have had to spend some $57,000 on taxable goods and services during the year. That’s more than most families of four in Texas make in a year. I guarantee you, nobody is going to notice this. That’s the real problem here – any tax cut will cost the state billions, but will accrue only modest benefits to the people. I can only wonder what if any effect this will have on the next campaign, assuming this goes through the Senate as well. BOR has more.
In response to your comment at my shop, I updated my post with this statement from the Children’s Defense Fund of Texas.