This little nugget is tucked into SJR 1, the constitutional amendment for the Senate’s property tax cut bill.
and prohibiting the imposition or collection of a tax on the conveyance, including by sale, lease, or other transfer, of an interest in real property.
A constitutional amendment prohibiting a sales tax on real estate transactions.
Last week Ross Ramsey told us what was going to happen, Killing a Tax Without Saving Taxpayers a Dime.
Careful readers will find an Easter egg tucked in one of the tax measures approved by a Senate committee this week — a mostly unmentioned clause that would constitutionally ban taxes on real estate transactions.
Don’t count your savings: Texas doesn’t even have a tax on real estate transactions.
Texas is one of the 13 states without a tax on real estate transactions; a constitutional ban would prevent future lawmakers from imposing one without voter approval.
It would make your friendly neighborhood Realtor happy, however. And it is especially delicious for the Texas Association of Realtors, the trade association for real estate agents and a wealthy and generous donor to political campaigns. For this industry, any talk of taxing home and building sales, leases and other transactions is a cardinal threat.
Not a bad idea to get all the real estate agents on your side when you’re trying to pass a property tax swap scheme that will have little effect on most homeowners.
The reason this is interesting is because last week many in the Texas business community pushed back on the Senate’s tax plan, Business groups say tax plan needs to make state needs priority.
Major business groups pushed back Friday against a multibillion-dollar package of tax cuts advancing in the Texas Senate, calling it inequitable and saying state needs should be funded before lawmakers consider tax relief.
The criticism highlights how, despite support for tax cuts among Republican legislative leaders, details are far from settled and are prompting dissension among lawmakers and businesses.
It also echoes concerns from some leading lawmakers that the emphasis on tax cuts could imperil efforts to address such issues, as education, transportation, state debt and pension programs.
And this week those in the real estate business in Texas pushed back on them.
Well-funded and vocal opposition to these measures show little regard for homeowners who are crippled under our current property tax system. Or for any business, especially small businesses, who are working within a tax system that stifles business expansion and economic opportunities.
Furthermore, in objecting to these tax relief measures the opposition boldly state lawmakers should protect infrastructure and special interests needs first: “If there is any money left over, it is appropriate to consider tax relief.”
While we support long-term infrastructure needs in Texas, we feel it is time to put home owners and business interests at the forefront of any public policy debate and not as a trickle down afterthought.
Didn’t see that coming. Pretty soon, if we aren’t careful, all taxes will be constitutionally banned in Texas. Which has been the plan all along.
Christopher Hooks does a good job of describing the wacky tax proposals of the new GOP Lt. Gov., Dan Patrick’s Inexplicable & Contradictory Budget Proposals.
Last week Lt. Gov. Dan Patrick did something pretty surprising: He held a press conference with a Democrat and the most moderate Republican left in the Senate, Kevin Eltife of Tyler, to put his stamp of approval on a proposal that would allow the Legislature to use revenue beyond the “spending cap” for tax cuts and debt repayment. The spending cap, a constitutionally enshrined limit on the amount the state budget can grow from biennium to biennium, has been a sacred cow for conservatives for many years. Here was Patrick, elected as a budget hawk, threatening to can the cap while pretending to do the opposite.
This session, budget-writers thinks there’s about $6 billion in revenue above the spending cap, but unless they take a majority vote to lift the cap, they can’t use it. Patrick wanted to bust the cap so he could get his hands on that $6 billion to pay for his beloved tax cuts, and this was a way of squaring the circle. Senate conservatives were mostly silent on the move, but it was loudly panned by commentators like Texas Monthly’s Erica Grieder, who pointed out that Patrick made a name for himself in the Senate in part as a loud opponent of an imaginary legislative spending spree in 2013, but now was looking for a way to bust the spending cap for the sake of political convenience.
But that was last week: Each week of the 84th Legislature brings to us a New Dan, and a New Day for Texas. Today, Patrick took to the same podium with some of the Senate’s most conservative members with a proposal to greatly tighten the spending cap, restricting even further the amount of revenue future legislators will have access to.
What the hell?
If it’s true, as R.G. Ratcliffe says, that “..homeowners believe their property taxes are unfair”, there’s an easy way to fix that. One of the most fair taxes ever invented is sitting in dry dock. And implementing it would automatically reduce property taxes significantly and make taxes more fair. Therefore lower taxes on most low, working, and middle class Texans and their families.
Of course it’s a state income tax. And isn’t likely to happen anytime soon. It’s something Democrats should champion. Until a state income tax is enacted these scams and schemes, with politicians twisting themselves in knots, attempting to find a solution, will continue.
The GOP is in a bind, so they want to change the rules in the middle of the game. This goes good with the temper tantrum they thew on Medicaid expansion earlier in the week.
Erica Grieder in the Texas Monthly uses way too many words to explain, in a nice way, that the Texas GOP is scheming to change the budget rules on debt and taxes. The GOP wants to bust the spending cap, without having to pay, politically, for busting the spending cap.
Since former Gov. Rick Perry’s tax diversion schemes ares no longer politically feasible, the new guys have to find a new scheme. And the only thing the GOP has relied on while in power more than diversions is passing the buck to the voters.
[GOP state Sen. Jane] Nelson described the measures as “a no-brainer” and predicted they would have little trouble drawing support from a majority of the state’s voters.
She knows that constitutional amendments pass easy in those off year elections, when voter turnout is less than 10%.
The most interesting part is the leeway the wing nuts are giving their buddy Patrick on this. Just imagine what the reaction would have been in Straus has proposed this. BTW, he’s against this scheme.
House Speaker Joe Straus appears not to like the Senate proposals.
“For 36 years our state spending cap has helped enforce fiscal discipline, and we should be very cautious about any attempt to weaken it,” Straus, R-San Antonio, said in a statement.
Democrats should be against this as well. They should make the GOP play by the same rules they used when they gutted education funding. Of course, it’s tempting to go along with a scheme where it looks like they’re willing to give on some things. But unless the GOP is willing to give on expanding Medicaid and fully funding public education they need to steer clear of this.
Here at EOW we’ve written about the GOP’s neglect of this state for quite some time. The “tax cut not matter the cost” schemes the GOP has concocted over the years are the cause. There’s been money to fix these things, they’ve decided that tax cuts are more important. Via the Texas Tribune, Signs of Neglect, Wear and Tear in State Government.
It didn’t happen overnight. The deterioration in state parks, hit by a series of budget cuts and outright raids on its supposedly dedicated funding by lawmakers, has been a running plot line in the papers for several years.
Likewise, the deferred maintenance at state buildings, which could cost almost $1 billion assuming the work begins now, dates backs a generation in some cases.
But with a new crop of leaders taking the reins at state agencies, stories of neglect and bureaucratic woe are spilling out into the open more than ever — in testimony before the Legislature, interviews with the media and dry agency reports.
Newly elected Comptroller Glenn Hegar has seen it firsthand. In his earlies days on the job, he learned that a hole in the bathroom wall at the Lyndon B. Johnson building had to be patched with toilet paper. He found out a female employee had to get rabies shots not long ago after coming into contact with one of the numerous bats flying in the building. And he discovered the real purpose of a quilt on the wall of an employee’s office.
“I thought it was decoration, but, no, that’s to muffle the sound of the bathroom behind her wall, so you can’t hear people that are on the toilet,” Hegar told The Texas Tribune on Friday.
The maintenance problems are not confined to the comptroller’s office.
“We have leaking roofs that have caused damage to servers. We have elevators that don’t work,” Attorney General Ken Paxton, who recently took over the top state attorney job from Gov. Greg Abbott, testified recently. “I’ve been surprised at some of the issues that we’ve already had to deal with.”
Nowhere is the deferred maintenance more dramatic than at the Texas School for the Deaf. Its fire safety problems got so bad last year that the state fire marshal’s office threatened to shut down the historic South Austin school. To keep it open, the Texas Facilities Commission agreed to patrol parts of the campus 24 hours a day to ensure buildings don’t go up in flames — a sort of human fire alarm system to replace a mechanical one that doesn’t work in a wide swath of the campus.
“We didn’t see that as a necessity,” Peter Maass, a deputy at the Texas Facilities Commission, said of the fire checks. “[But] we said, okay, we’re not going to argue.”
Oh well, that’s a shame. But as Lt. Gov. Dan Patrick has told us, “tax cuts are coming no matter what“.
There’s at least one member of the Texas Senate who’s speaking out about what the real priorities of The Lege should be. It’s not tax cuts and the Senator in not a Democrat, Republican rains on tax-cut parade.
As state lawmakers clamber aboard the tax-cut bandwagon, one Republican is raining on the parade that has been so enthusiastically arranged by his party’s leaders.
Sen. Kevin Eltife points out repeatedly, publicly and with rhetorical flair that the state has a list of long-neglected problems whose solutions would mean more to Texans than even a couple of hundred more dollars in their pockets from tax relief.
His position puts him at odds with Republicans and some Democrats who are championing big tax reductions. They say there’s enough money in these relatively flush times to both meet state needs and cut taxes by billions of dollars.
The list of problems comes easily to him: troubled pension funds, infuriating road congestion, growing state debt, long-running litigation over public education funding, state buildings going without basic repairs and universities in need of facilities.
“I just can’t jump out there and support tax cuts — as politically popular as that would be — I cannot do it until I know for a fact we have solutions to state problems,” said Eltife, R-Tyler. “Most of my constituents want us to solve problems.”
Most, if not all Texans want that too. And threats aside Eltife is sticking to his guns, and driving the wing nuts crazy.
Eltife said he doesn’t think about elections when he’s doing his work of the session, which possibly would make him unique among lawmakers.
“I don’t know why anybody would worry about elections right now in the middle of session when we are trying to solve the state’s problems,” Eltife said. “If this is the end of my political career, so be it. It’s not going to keep me from talking about the problems of the state.”
Most in The Lege are worried about what their funders want, those are their true constituents. So to them the next election is what the only thing the legislative session is about. They don’t want to be kicked out of the club.
Despite the good financial situation Texas is in, we can’t forget that the surplus we have was been built through neglect. Taxes have been cut and much needed items have been neglected. The bills are coming due and we have money to pay them. Instead we’re going to give that money to the wealthy and big business who already have more then they need.
It’s key for everyone to understand how we got to the budget situation were in today in Texas.
The money that was cut from the budget in 2011, and not replaced in 2013, is responsible for the surplus we now have that the GOP wants to give back to the wealthy and big business in tax cuts. Both budget estimates turned out to be way off base.
That original deficit in 2011 was caused by the GOP Tax Swap Scheme of 2006. Everyone knew, when it was passed, that it would create a structural deficit.
Teachers lost jobs, schools were de-funded, and many were forced to sacrifice so taxes on the wealthy and big business would not be raised.
Just think about that.
The money was never intended to be replaced. The GOP used the ruse of a tax swap in 2006 and the budget crisis it created in 2011 to gut public education. And since then, with the surplus it created, their main concern is to give more tax cuts to the wealthy and big business.
Kuff has the latest on the GOP tax cut Olympics that are going on in The Lege right now, We can always pay for tax cuts later.
The problem with the current tax cut schemes being discussed in The Lege is that there’s little relief being offered to those who pay the most, as a percentage of their income, in taxes. Via QR.
Texas earns dubious distinction, 3rd worst state for taxes inflicted on average Americans
Current tax cut bidding war means nothing to most Texans
While the Senate and House are in a bidding war for the biggest headline number of tax cuts that most Texans will not feel, the online financial publication “Marketwatch” named Texas the third worst state for taxes inflicted on average Americans.
The analysis reports that the Lone Star State has the fifth highest effective tax rate on the state’s bottom 20% at 12.5% and the 8th lowest rate on the top 1% at an effective tax rate of 2.9%.
From the story, “…the state relies heavily on sales and excise taxes. These consumption taxes accounted for nearly 32% of the state’s revenue, the ninth highest nationwide in fiscal 2012. The state also doesn’t provide low-income residents with any tax credits, which help offset sales, excise and property taxes in other states.”
The story can be found here.
The budget schemes of the Texas GOP is not only about lowering taxes, it’s also about destroying government – doing away with what they believe is unnecessary.
Texas Lt. Gov. Dan Patrick finally spilled the beans yesterday on his proposed tax swap scheme – not it’s not a tax cut! Via the HChron, Texas lt. gov. lays out transition from property to sales tax.
Texas Lt. Gov. Dan Patrick gave a rousing speech to the Texas Association of Business’ annual meeting in Austin on Tuesday…
Patrick’s draft budget would cut property taxes by about $2 billion and business taxes by $2 billion. Frankly, I think the $9 billion Texas Margins Tax on business needs to be scrapped completely and replaced with something new, but Patrick doesn’t appear to have that kind of ambition. He said there are proposals to cut taxes on inventories and equipment, but he added it is still early days in the session.
To pay for these tax cuts, Patrick said he would begin the slow migration away from property taxes to greater reliance on sales taxes, something he talked about on the campaign trail.
“The revenues we get at the state level are primarily sales tax,” Patrick said. “What we’ve done is a gradual transition from bringing more people in to help pay for what a handful of people – businesses and property owners – have been paying.”
There is no doubt that more people directly pay sales taxes than property taxes. But there is also no doubt that sales taxes hurt poor people more than rich people because more of a poor person’s income goes to buy goods and services than a rich person’s. That’s the reason why most governments use income taxes is to spread the burden based on the ability to pay. [Emphasis added]
Of course it’s no surprise that his plan is to lower taxes on the wealthy by raising taxes for everyone else.
BTW, here’s a list of items (see pages 7 & *) that are currently exempt from sales tax and will likely, as Patrick says, start the “slow migration” to being taxed. Things like baby formula, milk, and water just to name a few.
It’s becoming pretty clear what the cost Lt. Gov. Patrick’s “no matter what” tax cuts will be. There’s public education of course, a favorite punching bag of conservative Republicans, Early tax cut promises have education advocates worried.
The starting budgets of the state House and Senate, released last month, are similar on many fronts, but not with respect to education. Faced with $4.5 billion in additional revenue from increasing property values, the House has chosen to reinvest a portion of that in public education while the upper chamber is focusing on tax relief, a decision not sitting well with educators.
“I don’t know how you could say that budget prioritized public education,” Lonnie Hollings-worth, governmental relations director at the Texas Classroom Teachers Association, said of the Senate budget. “We think the priority should be to fund our public schools and not to do tax cuts.”
A cursory glance at the Senate’s document indicates the upper chamber wants to provide billions more this biennium for public education funding. But the promises of many senators, including new Finance Committee Chair Jane Nelson, to provide $4 billion in tax relief leave only around $200 million available for schools.
Here’s the interesting thing about the property tax cut that Lt. Gov. Patrick is proposing. The reason property taxes are out of control is because the state hasn’t increased revenue in a long, long time. Without increased funding from the state cities and counties have been forced to raise local taxes to keep up with needs.
City and county officials say they will work to educate lawmakers on the problems caps could bring. The messages vary across the state.
The Texas Municipal League has argued that cities and counties don’t deserve the blame for growing property tax bills. City taxes make up only 16 percent of the taxes levied across the state, while schools account for 55 percent of all property tax bills statewide, the organization says.
“Our message is that we are not the problem,” Sandlin said.
And leaders of fast-growing cities and counties say they need property tax revenue growth to pay for new roads, sewers and other infrastructure. Caps on how much appraisals grow could simply force cities to increase the tax rate, opponents of the bills say.
And the schools need that money because of the cuts to public education the state made during the budget “shortfall” in 2011. Which was not restored once prosperity returned in 2013.
The most egregious part of this is who will benefit and who will pay for these purported tax cuts.
Dallas County Judge Clay Jenkins said he worries that the caps would mostly help the rich. Property values tend to rise faster in the wealthier parts of town, he said, so those homeowners are the ones who would benefit most from a cap on appraisals.
“It is disguised as a tax break for all, but it is actually a shift from the upper class to the rest,” Jenkins said.
It’s the age-old story. The rich get richer, and the poor get poorer.
The cost of these tax cuts are not just to our pocket books. But they are to the future of Texas. The needed investments in education and infrastructure will be forsaken so the wealthy, who already have more then they need, can have even more.
Whenever the GOP wants to cut taxes all of us that aren’t rich need to grab our wallets. What are you willing to do without to get a tax cut? Tax cuts have a cost and we must make our politicians tells us what we will have to sacrifice to give wealthy Texans more money. Here’s some of what’s likely on the chopping block if the Texas GOP gets it’s wish, Some senators not so gung-ho for tax cuts.
Sen. Kevin Eltife, R-Tyler, said the Senate “base budget” unveiled last week by Lt. Gov. Dan Patrick and Senate Finance Committee Chairwoman Jane Nelson jumped to the conclusion that $3 billion in school property tax cuts and $1 billion in business-franchise tax reductions were possible.
Eltife, though, said the state also faces demands that it should spend more on highways and water infrastructure; shore up teachers’ and state workers’ pension funds; and preserve some money in case it loses the latest round of school-finance lawsuits.
Eltife said that like everyone, he is for tax cuts.
But he said he can’t support “removing $4 billion from the revenue stream until I know for sure that we can meet the needs of the state.”
Sen. John Whitmire, D-Houston, cited a major push that’s under way to shift around existing tax dollars, to increase transportation spending. It involves sales tax collected on cars, money that now supports schools, colleges, health care, prisons and general functions of state government. The Senate budget would shift $1.2 billion of the money into roads over the next two years. [Emphasis added]
Whitmire also talked about another idea popular with many business lobbyists — using some of the state’s expected surplus and “growth money” in 2016-2017 to retire state road bonds.
It should be no surprise that the GOP would sacrifice these things to get tax cuts for their campaign donors.
It may be hard to fathom for some but the purpose of these tax cuts has nothing to do with the timeworn wing-nut drivel that “you know better then government how to spend your money”. It has do with starving government, especially those things highlighted above, of money to continue. That’s always been the target for them.
Rick Casey asks this question in his column today, Does Texas really need lower taxes?
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.
There’s some context left out of this tax discussion. Who pays taxes in Texas. The tax burden in Texas falls greater on those at the bottom, and much less on those at the top. This recent report from the Institute on Taxation and Economic Policy (ITEP) shows how bad the disparity has gotten. BOR summarized the report, Texas has the Third Most Regressive Tax System in the U.S.
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.
As the middle class continues is 50 year decline the Texas GOP wants more tax cuts for the wealthy. Instead we should be fighting to rebuild the middle class.
Need has nothing to do with it.
The only thing sadder then the inauguration this week has been the reaction to it of retiring Texas Village Paul Burka. Also his lamenting the end of “adult behavior” because the 2/3rds rule is no more.
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.
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