I like the idea of lower taxes. Who doesn’t? But, frankly, I’m not sure I deserve them.
For one thing, because I live in Texas, my state taxes are very low by national standards. The Census Bureau reports that Texans paid $1,865 a year in 2012, the latest year I could find. That’s lower than all but seven states.
But state governments split the costs of government with local governments in different ways. So it gets even better. According to the Washington-based Tax Foundation, Texans rank 47th in combined state and local taxes.
The typical Texan pays 7.5 percent of his or her income in state and local taxes. To pay less, I’d have to move to Wyoming, Alaska or South Dakota.
But the biggest city in those states is Anchorage, with 292,000 in the last census. Cheyenne, Wyoming’s biggest city, weighed in at less than 60,000. The entertainment options are limited. And high school football must have a short season.
Compared to the other biggest states, Texas is a bargain. Californians pay $5,136 in state and local taxes, compared to our $3,088. New Yorkers pay more than double what we do, at $6,622. The national average is $4,217.
Casey ends by pointing out that while he feels he deserves a tax cut, he would also like other things too. Like well paid police and teachers, affordable higher education, roads, water, and parks. The assumption is that we can’t have tax cuts and all those things too.
It’s true, we can’t have low taxes and the things we need. But that’s one of the lies Republicans have been selling since Reagan and too many voters keep buying. When the bill comes due for their tax cuts then they want to cut all those items like education, etc.. instead of raising taxes to pay for them.
In Texas, the inequality is even worse. The top 1 percent only pay, on average, 2.9 percent of their income in state and local taxes – one of the lowest rates in the nation. Meanwhile, the lowest 20 percent of earners pay an average of 12.5 percent of their income in state and local taxes – one of the highest rates in the nation. That comes out to a tax burden for low-income earners that’s roughly 4.3 times as high as for the top 1 percent.
This disparity lands Texas’s tax structure as the third most regressive in the U.S. As the Center for Public Policy Priorities puts it, “Texans who are least able to afford it pay more in taxes as a percentage of their income than those who could easily afford to pay more.”
The fact that such inequality exists in Texas’s tax system is no surprise. Because Texas has no income tax, the tax burden falls on consumption-related taxes. And consumption takes up a much greater share of the low-income family’s budget than the wealthier family’s. According to the ITEP report, “No income-tax states like Washington, Texas and Florida do, in fact, have average to low taxes overall. However, they are far from ‘low-tax’ for poor families. In fact, these states’ disproportionate reliance on sales and excise taxes make their taxes among the highest in the entire nation on low-income families.” Texas actually gets two-thirds of its tax revenue from sales and excise taxes, compared to a national average of around one-third.
It’s obvious from this if the GOP wanted to lower taxes on those who pay too much, they would have to raise taxes on those who already have more then they need. And in actuality the cuts the GOP want to make will only lower the burden on the wealthy and raise it on the rest of us.
But the cuts the Texas GOP, and the right wing that’s running our state, want have never had anything to do with need. Never did and never will. It’s about ideology. They hate government and are convinced it can’t do anything good for anyone. And that’s what they intend to prove as they run out state into the ground.
I have always been a fan of the two-thirds rule because it gave the minority a fighting chance to take on the majority and it required a level of bridge-building and consensus to pass legislation. On a more basic level, it imposed “adult behavior on people who might be otherwise inclined.” Unfortunately for the Democrats, their party just doesn’t have the numbers to fend off the majority, so Patrick doesn’t have to worry about bridge-building, consensus, or adult behavior as the presiding officer.
I’m not sure what Lege he’s been covering for the last 10 years, but adult behavior went out the door quite a while ago. We get it, things have changed over the last 40 years . This is what happens when we have one-party GOP rule, they change the rules.
When 60 percent of 30 percent of registered voters are allowed to pick our elected leaders this is what we get. I wish Scott Turner would have been elected Speaker. The Democrats should have voted for him. Nothing will speed Democrats back to power in Texas faster then giving the wing nuts control. Once they break Texas then maybe we can get back to sane and rational government – Burka’s adult hehavior.
Don’t get me wrong, there will be serious negative consequences because of how our state is now “governed”. Anyone that’s not wealthy and/or connected is left out. And as long as our elected officials are allowed to essentially bribe corporations with tax payer money – likely the same corporations that bankroll their campaigns – little is likely to change.
It’s estimated that just keeping up with population growth will require $6 billion to $7 billion more in state spending on services. Much of that $5 billion is already spoken for. There remains supplemental Medicaid funding needs in the current budget. The state is appealing a court ruling that might require a revamping of state school financing, a key part of the ruling having to do with how underfunded the system is. The price of oil, taxes on which contribute much to the state budget, is on a downward spiral at the moment. And existing programs need more money than any of these extra dollars can address — likely more need than can be covered even if better-than-expected economic growth pumps in more than $5 billion extra into the budget.
In other words, unmet need atop unmet need in Texas.
So, of course, tax relief is said to be a priority for the Legislature next year. Huh?
Well, the far rights unmet need is always tax cuts. Unmet needs are in the eye on the beholder. The editorial goes on to discuss what could/should be done.
But needs cannot go unmet, and there are perhaps better ways to address this disdain for the property tax, inarguably high in Texas because it has no personal income tax. Creation of an income tax seems to be the third rail of Texas politics. It shouldn’t be.
If this incoming Legislature embarks on a path of tax relief, it must answer a few questions. Tax cuts necessarily mean less state revenue and the “extra” money won’t cover these and continuing needs. So:
Which programs will go unfunded or be under-funded? Make the case for diminishing these services, a likely result since population growth alone dictates new need. Agencies won’t be able to find enough “efficiencies” to make up shortfalls.
If the answer is to simply maintain current funding levels for various state agencies into the next biennium and crow about how no cut in funding occurred, see the question above. And explain this also in the context of the state not fully digging out of previous cuts.
If the answer is to shift money, say, for example, from the Department of Public Safety to transportation, where will the money come from to fill the hole at DPS?
There are proposals out there to increase the homestead exemption for property taxes for schools. It is currently a $15,000 exemption and legislators are talking about bumping that up to $25,000 to $30,000.
At $30,000, according to the Center for Public Policy Priorities, this would mean $1 billion less.
With so many needs unmet in Texas, we are skeptical of any tax cut, but an increase in the homestead exemption at least has the advantage of being progressive. This is money that will benefit low- to middle-income homeowner families. And such relief across the board can help ameliorate this strong bias in Texas against funding public services.
But the state must make schools whole, filling any shortfalls created, or this is not worth doing at all.
The editorial is great and there’s little for someone like me to quibble about. Yes, we should discuss an income tax and our needs must be met. But that’s likely to happen anyway. I’ve written words like this many times. The government that’s about to take office has no interest in anything with the word “progressive” attached to it.
I applaud the SAEN editorial board for writing this article and we need a steady chorus of this stuff over the course of years to get the message across. But anyone who thinks something like this is going to be accomplished this session needs their head examined.
An article from the DMN has a better take the fight will be over. Which tax cuts and how much will be cut, Prospects for Texas tax cuts dim as oil price drops. While the amounts may have be smaller, for now, when it comes to the folks that will be sworn in a week from Tuesday it’s still tax curs all the way.
Elated by prospects of an election romp and overflowing state coffers, some state Republican leaders suggested that significant cuts in Texas’ property and business taxes lay ahead.
But a year-ending plunge in oil prices, which help drive so much of state revenue, has tempered their optimism. Supporters are clashing over what to cut. And priorities for spending have shifted.
It all leads to downsized expectations of how much tax relief the GOP-controlled Legislature and top Republican leaders will be able to deliver in their session beginning next week, business leaders and key lawmakers say.
Even some tea party-backed conservative lawmakers say tax cut fever has cooled in recent weeks.
Tax cuts will be the key pocketbook issue in lawmakers’ five-month session. While guns, immigration and abortion are likely to generate more passion, GOP leaders’ desire to deliver at least some tax relief will drive budget decisions affecting public schools, state universities, prisons, roads and health care.
More money is needed to pay for our growing state, and all we’re likely to get is more tax cuts that will largely go to the wealthy. Money for nothing.
The one issue that often gets overlooked, that made Davis and the Democrats job extremely hard, is the [extremely good] economic conditions in Texas.
There’s nothing so sweet as being the Texas Governor during an oil boom, and exiting right before the bust. Via Kevin Drum at MoJo, Rick Perry Is One Lucky Dude.
Man, Rick Perry is one lucky guy, isn’t he? It’s true that the “Texas Miracle” may not be quite the miracle Perry would like us to believe. As the chart below shows in a nutshell, the Texas unemployment rate has fared only slightly better than the average of all its surrounding states.
Still, Texas has certainly had strong absolute job growth. However, this is mostly due to (a) population growth; (b) the shale oil boom; and (c) surprisingly strict mortgage loan regulations combined with loose land use rules, which allowed Texas to escape the worst of the housing bubble. Perry had nothing to do with any of this. And now that oil is collapsing and might bring the miracle to a sudden end, Perry is leaving office and can avoid all blame for what happens next.
One lucky guy indeed.
This is culled from a blog post where the specter of oil busts past (1986) are being discussed.
As we weigh the evidence, we think Texas will, at the least, have a rough 2015 ahead, and is at risk of slipping into a regional recession. Such an outcome could bring with it the usual collateral damage that occurs in a slowdown. Housing markets have been hot in Texas. Although affordability in Texas looks good compared to the national average, it always does; compared to its own history, housing in some major Texas metro areas looks quite dear, suggesting a risk of a pull-back in the real estate market.
The effects of an oil bust will likely not be felt until the next legislative session. But if it starts to show during this session, the GOP will likely use it as an excuse to cut, or not fund, items that help middle class prosperity – public education, higher education, health care, transportation, etc. The things that have been neglected since the GOP took control of Texas.
While no one wants the Texas economy to turn sour, nothing can change the fate of a political party faster then a sinking economy and an inability to deal with it. Miracles cannot be explained. The so-called “Texas Miracle” never was one, and what happened in Texas was always explainable, The Texas Unmiracle.
The problem with ending tax diversions has always been that the GOP will never say how they will replace the funding for the items the diversions are funding. That still holds true with the state Sen. Charles Schwertner (R-Georgetown) and his proposed legislation to end gas tax diversions.
He has pre-filed legislation to stop diverting $620 million dollars a year for other things.
Schwertner calls it “truth in taxation”, that he believes “when we have a dedicated tax, it should go to that dedicated purpose.”
Schwertner notes keeping all state fuel tax money for highways is only one piece of the funding puzzle, adding the state needs $4 to $5 billion dollars a year.
Schwertner says the fuel tax has been used, among other things, for the Texas A&M Transportation Institute, the Department of Public Safety, and the Attorney General’s office.
He says once this legislation is passed, then the discussion will start on prioritizing the state’s budget. [Emphasis added]
In other words Schwertner won’t tell us how he’ll replace the money, if at all, until his bill and amendment are passed. This legislation cannot be fairly evaluated without knowing how or if the diverted money will be replaced.
At the link above there’s an audio conversation available, give it a listen. For someone who likes to talk about so-called “truth in taxation” he’s certainly unwilling to admit how he would replace that $620 million.
One thing that was exposed as a result of the Lt. Gov. debate on Monday night was the extreme position of many in the GOP, highlighted by GOP nominee Dan Patrick, who want to make taxes more unfair in Texas. Via Forrest Wilder.
In the same way, he hopes to win in November by promising tax reforms that he’ll be hard-pressed to deliver. He’ll decrease some unspecified number of people’s property taxes by spiking the sales tax—in other words, he’ll move the state from a tax that hurts the middle class to a tax that hurts the poor. We’re weeks away from the election, and Patrick’s already got several sessions of dubious policies he’s promised to get done next session. (Add overhauling public ed to the list.)
Texas families earning less than $100,000 a year would pay about $1.1 billion more a year in state taxes, while higher-income residents would see a tax cut of $437 million under a House bill designed to cut school property taxes, a report said Tuesday.
The Legislative Budget Board’s analysis of House Bill 3 also shows that the legislation would shift a portion of the state tax burden from businesses to individuals.
And that’s the kind of scam Patrick wants to run now. Instead of that gem the GOP wound up passing a tax swap in 2006, that created a structural deficit, but they left the sales tax alone.
During the recent Republican primary for state comptroller, state Sen. Glenn Hegar repeatedly endorsed eliminating local property taxes in Texas.
Borrowing from GOP opponent Debra Medina’s 2010 playbook, Hegar urged a shift to sales taxes to make up the more than $40 billion a year of revenue that cities, counties, school districts and other local governmental entities would lose.
Hegar, R-Katy, even suggested a very rapid transition to the new tax system. At a Longview tea party gathering in January, he told a man in the audience, “You just do it.”
This week, though, the governing implications of so massive a shift seem to have cooled Hegar’s jets.
Burying the property tax, after all, would require leaders to more than double the current rates of all state and local sales taxes.
Getting rid of the property tax, and replacing it with a much higher (at least doubled) sales tax would make an already unfair tax system in Texas, even more unfair. The GOP likes to call them consumption taxes, but these taxes fall much harder on consumers with low incomes then those at with higher incomes.
Think of it this way, and extra $20 when spending $100, if it’s raised to 20%…and extra $25 is it’s 25%. An extra $25 bucks on a grocery bill, it makes a $40 pair of shoes $50. Who does that hurt more the single mom or the wealthy suburban family? No property taxes will help those at the top abundantly more than everyone else. And don’t expect them to share, Half of All Income Goes to the Top 10 Percent.
A plan like Patrick and Hegar’s would also take away local control of tax dollars, as Democratic candidate Leticia Van de Putte so aptly pointed out in the debate. City and county governments would be left to rely on the state sales tax for money to pay police, firefighters, and first responders as well as all city and county employees. And during an economic downturn, where sales tax plummets, the cuts could be disastrous.
The GOP’s plan has always been higher taxes on the poor and middle class, and lower taxes on the wealthy. There is no feasible plan they will come up with that will lower taxes for Texans. All they can hope to do is pass another tax swap scheme. A scheme that will create a worse budget situation that they can then use to cut state spending on education, health care, roads and other infrastructure and speed us on our way to privatization.
There have always been many things wrong with these funds that The Lege allowed Rick Perry to play with. But the main one is that there’s really no beneficial economic reason for them. Most of the companies that came here would have anyway, without the incentives. Also the money would have been better spent on other needs to entice businesses to Texas.
It is commonly thought that firms will migrate to a particular state for the purpose of reducing costs, since lower costs may result in higher profits for business owners. But state and local taxes are not typically a significant cost of doing business. All state and local taxes combined make up but a small share of business costs and reduce profits only to a limited extent. Indeed, the costs of taxes pale in comparison to many other location-specific costs, and numerous location factors—including qualified workers, proximity to customers, and quality public services—can be more critical than taxes. The availability of these vital location factors depends in large part on each state and locality’s commitment to public investment—and their ability to pay for it. Research, in fact, substantiates that public investment plays a positive role in helping lower costs for firms. [Emphasis added]
In a place that’s booming like Texas, there is no need for this. The only time incentives like this pay off is in an area that is extremely economically depressed.
The better place for Texas to be spending it’s money would be on transportation, schools, water, and infrastructure. It looks like more and more people are getting hip to Perry’s scam.
“I firmly believe the property tax is very cumbersome,” Hegar said. “It’s very troubling for homeowners, for business owners…it’s unfair in how it’s applied across the board.”
But, the Katy state senator said it’s up to the Texas Legislature, not the comptroller’s office, to decide to amend the system.
Yes, there’s plenty of unfairness, especially when it comes to commercial and corporate tax breaks. It’s nice how he quickly pointed out that it’s someone else’s responsibility anyway. He’s currently in the Texas Legislature.
The real issue, of course, is the unequal, unfair, and insufficient tax system we have in Texas. Our schools and higher education systems are under-funded. Our health care, and safety net in Texas is at or near the bottom. Our infrastructure is crumbling.
If, as Hegar says, the property tax is cumbersome, then there are ways to alleviate that. But it’s not by eliminating it and raising the sales tax to 25%. A more sane way to do it would be by have a balanced state tax system across three types, aka the three-legged stool. The stool consists of three kinds of taxes – sales, property, and income. Having all three allows each to be low, and in Hegar’s words, less cumbersome.
In Texas we are missing one leg of the stool and therefore it causes the other two to bear more or the burden, be more cumbersome. The sales tax is the most regressive, (imposes a greater burden (relative to resources) on the poor than on the rich), of these three taxes, and the income tax the least regressive. Taking away the property tax and raising the sales tax would therefore raise taxes on poor and working Texans while lowering taxes on the rich.
In order for Texas to have a more equal, fair, and sufficient tax system to fund our state’s needs, we should be talking about an income tax and which would do all of that and allow for much lower property taxes. Don’t worry, it’s not like anyone running for office, from either party, is going to propose anything like this.
The 219-205 vote on the budget outline takes a mostly symbolic swipe at the government’s chronic deficits. Follow-up legislation to actually implement the cuts isn’t in the offing. Twelve Republicans opposed the measure, and not a single Democrat supported it.
The measure passed after a three-day debate that again exposed the hugely varying visions of the rival parties for the nation’s fiscal future. Republicans promised a balanced budget by 2024 but would do so at the expense of poor people and seniors on Medicaid, lower-income workers receiving “Obamacare” subsidies, and people receiving food stamps and Pell Grants.
Democrats countered with a plan that would leave Obama’s health care plan and rapidly growing health programs like Medicare intact, relying on $1.5 trillion in tax hikes over the coming decade to bring deficits down to sustainable but still-large levels in the $600 billion range.
The GOP plan, by Budget Committee Chairman Paul Ryan, R-Wis., would cut more than $5 trillion over the coming decade to reach balance by 2024, relying on sharp cuts to domestic programs, but leaving Social Security untouched and shifting more money to the Pentagon and health care for veterans. It reprises a controversial plan to shift future retirees away from traditional Medicare and toward a subsidy-based health insurance option on the open market.
While staking out a hard line for the future, follow-up legislation is likely to be limited this year to a round of annual spending bills that will adhere to a bipartisan budget pact enacted in December.
But the Ryan plan does paint a picture of what Republicans would attempt if they claim the Senate this fall and the White House in 2016. Its cuts to entrenched benefit programs like Medicare and Medicaid, however, would be difficult to pass even if Republicans gained control of both the House and Senate in this fall’s elections.
“It’s totally out of touch with the priorities and values of the country,” said Rep. Chris Van Hollen, D-Md. “This is a clear road map of what Republicans in Congress would do if they had the power to do it.”
Ryan’s plan revives a now-familiar list of spending cuts to promise balance, including $2.1 trillion over 10 years in health care subsidies and coverage under the Affordable Care Act; $732 billion in cuts to Medicaid and other health care programs; and almost $1 trillion in cuts to other benefit programs like food stamps, Pell Grants and farm subsidies.
The measure also promises deep, probably unrealistic cuts to domestic programs like education, health research and grants to local governments that are funded each year through annual appropriations bills. [Emphasis added]
The move underscored the different universes the two parties occupy as election season heats up. Democrats see the budget, which passed on Thursday in a 219-to-205 vote, as a political millstone, with brutal cuts to popular government programs, sweeping and controversial changes to Medicare, and tax cuts for the rich. Republicans consider it a modest step.
The budget — the fourth presented by Mr. Ryan, the chairman of the House Budget Committee — is nonbinding and will go nowhere in the Senate.
But Republicans will try to use the vote to prove their tough-minded fiscal credentials. And Democrats will seek to tar their opponents by spotlighting the budget’s deep cuts to education, food stamps and transportation programs, its proposed transformation of Medicare, and the tax rate cuts for the rich.
The budget bill tally demonstrated the Democrats’ certainty that the Ryan budget will badly hurt its supporters — no Democrats voted for it. [Emphasis added]
Make no mistake, despite all the articles stating that this has no chance of passing, this is the GOP agenda. And if they pick up seats this November they will set out to make this a reality. As evidenced by Carter’s Orwellian press release after his rubber stamp of the Ryan Budget.
During our economy’s best decades, Congress invested in the American workforce and every family was better off for it. But recent years have been dominated by growing inequality and a Republican majority in Congress obsessed with slashing the budget, making it harder for working Americans to find decent jobs and save for the future. The Congressional Progressive Caucus’ Better Off Budget reverses the damage budget austerity has inflicted on hard-working families and restores our economy to its full potential by creating 8.8 million jobs by 2017.
The Better Off Budget reverses harmful cuts that have hit working families the hardest—starting with repealing across-the-board budget cuts known as the “sequester.” It creates a fairer tax code so that low and middle-income families no longer pay more than they should while the world’s biggest corporations benefit from unnecessary loopholes. Our budget reverses harmful pay freezes, expands benefits for federal retirees and strengthens federal health care and retirement programs Americans rely on.
When the federal budget invests resources wisely, we can meet the needs of working families and shrink the deficit. The Better Off Budget not only creates jobs, it reduces the deficit by $4.08 trillion over the next 10 years. It’s the right budget for the country, for working families and for our future.
That shows a clear difference between Democrats and the GOP. I certainly hope that Democrat Louie Minor, who is running against Carter, will support the Better Off Budget.
What Democratic candidate Mike Collier is doing thus far in the race for Comptroller of Texas is spot on.
The wing nuts in the Texas GOP, for too long, have been getting away with saying crazy things and not being held accountable for them. Showing the painful reality of their right wing fantasies on Texans is what’s been lacking for too long.
And voters need to understand that a 20% plus tax on everything they buy would be an economic disaster. Especially for those at the bottom of the income scale, who are already hurting.
Local property taxes account for roughly 47 percent of tax revenue in Texas, according to a 2012 report from the comptroller’s office. State and local sales taxes make up 32 percent of revenue.
Another 2012 study – written by former deputy comptroller Billy Hamilton and published by a Republican group called Texas Tax Truth – said consumers would have to pay up to 25 percent in state sales tax to make up for the approximate $45 billion in lost revenue caused by abolishing property taxes. [Emphasis added]
“There’s no way that Hegar can make a sensible convincing policy point that we should get rid of the property tax in favor of a broader, larger sales tax,” said Cal Jillson, a political scientist at Southern Methodist University.
And, the shift from property taxes would deprive local governments, school districts and other entities of their primary method of revenue collection, said John Kennedy, an analyst at Texas Taxpayers and Research Association. That would mean municipalities would have to rely primarily on the state to finance their operations.
Making school districts beg the state even more for funding. That’s another right wing dream come true. This is just another right wing fantasy that would hurt the majority of Texans. We need real solutions not more tea party nonsense.