It should be well understood by now how GOP fiscal schemes work. Cut taxes on the wealthy, run up massive debt and deficits, use it as an excuse to cut social programs, and screw the poor, workers, and the middle class. No matter who is the GOP nominee in 2012, no matter the “compassionate conservative” Luntz-label attached to it, that is the plan.
There’s a report our today from the “bidness” friendly TTRA, Report: State business tax accomplished some goals, failed on others.
An analysis released today by the Texas Taxpayers and Research Association found that the state’s much-maligned business tax accomplished some of the Legislature’s original goals but fell short elsewhere.
The shortcomings of the margins tax are well known. Overhauled in 2006 as part of a court-ordered school finance fix, the tax failed to raise anywhere near the revenue that had been projected. In 2008, the first year the revised tax was collected, it brought in $1.4 billion less than expected, a gap that widened as the economy tanked.
But the business-backed research group noted that the disappointing collections actually put the tax better in line with what other states levy on their businesses.
“Had the margin tax generated the $6 billion annually that was initially forecast, Texas would have had the nation’s sixth highest tax, just above business-unfriendly California in seventh place, and almost 50 percent higher than the national average,” according to the report.
Boiled-down what they mean is that because the tax isn’t performing as forecasted it’s good, if it had performed as forecasted it would be bad. The 2006 GOP tax swap scheme has created a huge hole in the state’s budget by lowering taxes on (some) businesses, while property taxes are being raised back to where they were in 2006. It has also created a structural deficit that has allowed government services, that help keep Texans out of poverty, to be cut, and they want us to believe that’s a good thing.
The true irony is that even though “bidness” is paying less in taxes because of the 2006 tax swap scheme they’re still suing over it. From Off The Kuff, Margins tax lawsuit goes to Supreme Court.
One more thing:
The state estimated the margins tax would raise almost $12 billion in the 2008-09 budget. It actually brought in $8.7 billion in its first two years.
Earlier this year, legislative leaders highlighted the need to reform the tax, but there was little appetite for tackling another complicated issue while grappling with a massive budget shortfall.
Lawmakers have promised to discuss how to fix the margins tax leading up the 2013 legislative session.
No, there was little appetite for doing anything that might raise revenues and thus mitigate the worst of the cuts. The fact that the underperformance of the margins tax was a huge driver of that massive shortfall was blithely ignored by nearly every Republican in Austin. I guarantee you, the more Republicans that are in the Lege in 2013, the more they will continue to pretend that Texas doesn’t really have a revenue problem at all.
Here’s an awesome quote from David Dewhurst (circa February 2008) on the margins tax:
Lt. Gov. David Dewhurst, talking to a business group about state finances and the outlook for the state’s main business levy — the new business margins tax: “We have no idea what this new tax is going to produce.”
But the GOP knew that this tax scheme was not going to produce from the start. It was the plan.