05.08.13

Priorities – what’s passing and what isn’t

Posted in 83rd Legislature, Around The State, Taxes, The Lege at 11:22 am by wcnews

The GOP in Texas loves nothing more then giving tax breaks to the already meagerly taxed businesses and corporations in our state.  They give them tax breaks like they’re free, Texas House votes for wide range of tax cuts for businesses.

The House embraced hundreds of millions of dollars in new business tax cuts late Tuesday, adding breaks for aerospace companies, pipelines, private hospitals and broadcasters to a ballooning tax relief bill.

House members tentatively approved the measure, 112-27, after hours of debate in which Democrats lamented that the House was creating loopholes in a flawed tax system while still underfunding priorities such as public schools.

The bill began as a $397 million laundry list of corrective actions for aggrieved businesses. But after hours of wrangling, it wound up dropping about $667 million of breaks onto an ever-wider array of trade groups and businesses with complaints about the 2006 margins tax, as the old business-franchise levy was dubbed.

Ah yes, the margins tax. It was implemented to replace the money from lowering property taxes. I did not lower property taxes and it created a structural budget deficit in Texas.

In 2006 the Legislature required school districts to reduce their school property tax rates by one-third, but committed to replacing the foregone property tax revenue so that the school districts would maintain their total state/local revenue. To fund this commitment, the state reformed the franchise tax (now popularly known as the “margins tax,” for reasons explained below) and increased the cigarette tax. However, the new state revenue raised by these changes falls some $10 billion short in each biennium of replacing the property tax revenue given up by the school districts.

Which the GOP has used as a tool to defund public education.  It was like Christmas Day for businesses on the House floor yesterday and there were presents for all, except the actual taxpayers.

Hilderbran’s bill would make permanent a tax exemption for about 28,000 of the state’s smallest businesses — those with less than $1 million in gross annual receipts. It would tax auto repair shops — now paying a 1 percent rate, after deductions — at the same 0.5 percent rate paid by auto service departments at retail stores such as Sears.

The bill originally granted relief to groups ranging from crop dusters to oil land men to haulers of heavy aggregates used in construction. Members then added more than a dozen amendments, tweaking rates for some categories of filers and letting retailers deduct part of their costs of letting customers use credit cards.

Rep. Geanie Morrison, R-Victoria, sponsored an $80 million amendment that shaved by 5 percent the rate paid by businesses that deduct their payroll before calculating how much they owe.

The House swiftly approved other proposals helping aerospace and defense contractors (at a cost of $20.3 million); private hospitals that treat Medicaid patients ($18.8 million); pipelines ($10 million); and broadcasters ($2.9 million).

And Democrats were rightly pissed.

A veteran Democrat who has served on the House’s tax-writing panel said the bill would further weaken a poorly drawn tax.
“It takes a stupid tax policy and makes it stupider,” said Rep. Mark Strama, D-Austin.

“Out of control,” fumed House Democratic leader Yvonne Davis of Dallas.

She said public schools have made some gains in the House’s version of the next two-year budget, but the increased pressure to find room for tax cuts could reverse that.

Rep. Sylvester Turner, D-Houston, asked Hilderbran if House leaders told him how high he could let the bill’s price tag creep.

“I haven’t been given a specific number,” Hilderbran said. “But … I’ve been trying to be responsible.”

The two argued over who would benefit.

“Is there anything in this [bill] that provides a tax break for mom and dad that’s working every day, paying for child care, trying to take care of their bills?” Turner asked.

Hilderbran replied: “Absolutely, the small employers, the mom and pop businesses get relief in this bill … and will be stronger.”

In other words, no is the answer. Not only is it key to see what is passing through The Lege, we must be mindful of what is not.

Medicaid expansion looks unlikely to pass.

“I’m disappointed,” Zerwas said. “It’s one of the biggest issues of the session and we didn’t really have the robust debate I thought we should have. But people on the pay scale above me made the decision.”

Zerwas said supporters “had enough support to carry the House — certainly, over 80 votes.” He said he crafted a compromise with Rep. Charles Perry, R-Lubbock, that would make Texas’ effort resemble as closely as possible the Medicaid block grant preferred by many Texas conservatives — including both Perrys, Rick and Charles.

Zerwas said if the deal with Charles Perry were approved as a floor amendment, Rep. Perry was prepared to become a co-author. But Zerwas said he couldn’t overcome resistance in the Calendars Committee.

Prospects for payday lending regulation decline. There’s much more on the payday lending’s corruption of our political system here.  Of course these issues, if passed, would help the people and taxpayers of Texas.  It would seem that’s why they’re unlikely to pass.

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