06.13.08

Tearing At The Margins Tax

Posted in Around The State, Bad Government Republicans, Commentary, Election 2008, Taxes, Uncategorized at 10:19 am by wcnews

The Texas Republicans are falling all over each other, trying run away from the mess they created in 2006. That it was a bad plan, that would do nothing to fix the school funding issue everyone knew back then. But, in two years leading into this election it has become a political liability for Texas Republicans.

Unfortunately, some Texans are tempted to make a U-turn – or take a detour – when it comes to the new business tax Texas legislators created in 2006 to help fund schools. Some businesses have been complaining about paying it. GOP Sen. Kay Bailey Hutchison recently called it “an abject failure” because it hasn’t resulted in promised deep property tax cuts. And state Sen. Dan Patrick, a Houston Republican, wants to postpone the tax until further notice.

Lt. Gov. David Dewhurst, a Republican, created his own stir when he recently told Austin CEOs that he prefers a low rate on a tax that covers corporations and partnerships. Later, though, he told us he considers it premature to consider specific changes until the state sees how the tax works.

Timing is key in politics and so is running away form someone or something that’s radioactive. Right now with the first “margins” taxes on businesses in Texas coming due, and an election in November, it’s popular in GOP circles to rail on the tax they created. (A couple of examples here and here). Keep in mind there is no surplus for next session, and public schools are not benefiting at all from what this new GOP tax. It’s pathetic, adding to the Texas GOP’s horrible image, and highlighting, once again they’re inability to govern heading into the 2008 election. But a little context is needed.

If we can for a second hearken back to the special session(s) of 2006, it may help a little. Texas’ GOP controlled government had to do something, no matter how bad the “fix” was, or schools wouldn’t open on time. Because of a judges ruling that a new funding mechanism had to be in place by June 1st of 2006, they were boxed. The margins tax was the best the fractured GOP legislature and a besieged governor – with three challengers nipping at his heals – could come up with. If schools didn’t open on time that could have fatally damaged Perry’s reelection and they may have had even deeper losses in the legislature. That many in the Texas GOP are now trying to run away from their plan, and put it in Perry’s lap, is not surprising. Responsibility and accountability is not in the GOP’s DNA after all. This was a short-term political solution, not a permanent long-term fix to the school finance problem, and they knew that back then. Shortly after it was passed the Lt. Gov. was already talking about “tweaking” it.

“We’re going to look at tweaking, re-examining the tax,” said Dewhurst, who holds out hope that instituting technical corrections in the tax package could solve imbalances without having to adjust tax rates. Unfortunately, long-running controversies involving school finance and tax reform in the state have shown that painless solutions are few and far between.

Put in proper context it’s now easy to see how this is going to be Exhibit A against Perry by all his GOP cohorts that will try to unseat him in 2010 – Dewhurst, Hutchison, Patrick. This GOP-invented tax has become anathema to the GOP base. This new tax is hitting businesses,in particular small businesses, especially hard and the Republicans are responsible for it. Heading into the 2008 general election that’s really bad timing and it’s tarnishing the GOP brand even further.

There were then, and still are now, other ways to fix this problem, permanently. But that would take leadership, which is lacking in Texas right now. At this point and time if we want to lower property taxes, permanently, and do away with the worthless tax swap of 2006, then we have two options. Jack up the state sales tax, which would increase the already large tax burden on the poor and middle class, or institute a modest progressive state income tax, which would reduce the tax burden on the poor and middle class, and increase tax fairness across the board.

Those on the right will kick and scream about a state income tax, because they know it’s a fair tax, that will make the wealthy and corporations pay their fair share, which is more than they’re paying now.  What Texans must realize is that their is no easy answer to this issue and that one way or another were going to have to pay if we want quality public education.  The GOP has also conned many taxpayers into believing their nonsense on an income tax. But to fix our current problem, all it takes is a modest progressive state income tax and property taxes would be cut by 90%. It’s that or would you rather pay 15% on top of your child care bill, or for milk, or at the doctor’s office, or….well you get the picture.

It’s only fitting that the Texas GOP’s latest tax scam is coming unraveled just in time for a change election. It’s also fitting that they have only themselves to blame, and that must be really frustrating for them. But it’s not just businesses that are hurting because the new GOP tax did nothing to fix the school funding issue. Public schools are no better off than they were in 2006. How can we expect people who see government as the problem to use government to fix problems? And why do people keep voting for them thinking they will? The Texas GOP is out to show that government is not good, and they’re succeeding.

Electing more Democrats to the Texas House, Senate, and Congress in the fall and bringing back two-party, accountable government to our state must be a priority.  That’s the only way we can change Texas for the better.

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