Governor Perry Calls for Major Tax Reform (Texas)

RickPerry.org ^

[mnehrling]

The Texas Tax Reform Commission Plan will deliver record tax relief, real tax reform and greater tax fairness for homeowners and businesses. It provides a historic $6 billion property tax cut, and ensures that the state carries more of the school finance load – not local property taxpayers. It reforms the business franchise tax so more businesses pay for our children’s education while lowering the tax rate and maintaining a strong climate for continued job creation. And with a net tax cut of nearly $1.5 billion by the 2007 tax year, this plan will result in more families being able to afford to buy a home, more jobs that provide good healthcare plans and benefits, and more children excelling in schools that have the reliable revenue stream they need to succeed.

Tax Relief

• This plan provides the largest property tax cut in Texas history with more than $6 billion in relief — a 33 percent reduction in school operations taxes for homeowners and employers.
• This record property tax relief will make homeownership more affordable for millions of Texas families, and allow employers to spend more resources on jobs and growth.
• Overall, this plan will provide taxpayers with a net tax cut of nearly $1.5 billion by the 2007 tax year.
• This plan delivers tax relief to Texans in every income bracket – only those who voluntarily consume tobacco face the possibility of a higher net tax burden.

Tax Reform

• This plan reforms the franchise tax to make it broader and fairer and the tax rate lower. It closes loopholes so that more businesses pay their share of education costs, while also lowering the primary franchise tax rate from 4.5% to 1%. Some who pay the franchise tax today will pay less, and many employers will pay the same or less in taxes when the property tax reduction is included.
• It spreads the financial burden of paying for education across a broader cross section of the economy so that schools have a more reliable source of revenue. Like a diversified investment portfolio, the result will be that schools will have a more stable and predictable revenue stream, even if one segment of the economy experiences a downturn.
• This plan will help Texas maintain a strong climate for job growth by doubling the small business exemption from $150,000 to $300,000 in total revenue and indexing it to inflation. Sole-proprietorships and general partnerships owned solely by natural persons will continue to be exempt from the tax.
• It provides unprecedented incentives for employers to hire more Texans and invest in healthcare for workers and their families. In general, the more an employer spends on paychecks, healthcare and pensions, the less they will pay in taxes.

Tax Fairness

• This plan delivers net tax relief to Texans in every income bracket when tobacco consumption is not considered. As a group, only Texans who choose to consume tobacco face the possibility of a higher net tax burden.
• It ensures that a greater share of education costs are paid for by the state. The state will pick up an estimated 50% of the cost compared to an estimated 36% today.
• This plan significantly reduces the amount of local property tax dollars that are recaptured and redirected from one school district to districts in other parts of the state.
• It helps end the over-reliance on local property taxes to pay for our schools.

Q & A

Why not just spend the surplus now and take up comprehensive tax reform later?

Spending some of the surplus on tax relief is wise and responsible. But simply spending all of the surplus to meet the bare bones requirements of the Supreme Court ruling is not the best choice for a number of reasons:

• It will lead to a multi-billion dollar deficit in the next regular session, which will most likely result in a tax hike.
• It doesn’t provide a long-term solution to the school finance problem. A tax cut that is paid for using only surplus funds is temporary because there is no new mechanism to sustain the relief. When the tax relief runs out, the courts will likely step in again and Texas will be back at square one.
• A surplus-only tax cut provides less relief to homeowners and employers for a shorter period of time. Exclusively using surplus funds will deliver a smaller tax cut for just one year. The Texas Tax Reform Commission Plan delivers a 33 percent tax cut that is paid for in the years ahead.

Why doesn’t this plan provide “new money” for education or authorize additional classroom reforms?

• First, this plan increases the state share of education funding dramatically. Second, it gives schools a more reliable revenue stream for the future. Third, it provides school districts additional funding capacity than they have today. And fourth, it will result in continued economic growth and job creation, which means government will have more money to invest in priorities like education because of a growing tax base.
• The Supreme Court has said that lawmakers must reform our property tax system or schools will shut down. That is why the governor has asked lawmakers to address this issue first.
• There is no greater proponent of education reform than Gov. Rick Perry. He supports higher pay for teachers as well as merit-based pay, tougher classroom standards and more accountability for taxpayers. But he also recognizes that new classroom reforms will accomplish nothing if classrooms are closed because lawmakers failed to pass a school finance bill.

[mnehrling]

So far, the DNC, TEA, and Strayhorn have all blasted the plan.. cannot be all that bad with enemies like that..

[i_dont_chat]

With the State getting the biggest burden, I hope this does not usher in a State Income Tax.

I like it. Won't affect me much, because (being retired) I already live very modestly, and own a small home.

[Lunatic Fringe]

Well, a politician came up with the plan, so we know someone is getting screwed.

With Texas schools desperate for money, Perry has once again endorsed a plan that he KNOWS is destined for failure in the special session. Cut property taxes and increase business taxes??? Yeah, right... the Texas legislature is made up of business owners who play part-time politicians every 2 years.

And counting on smokers to provide tax revenue is a bad idea.

[mnehrling]

The Texas Constitution prohibits a State Income Tax.. No matter how much Strayhorn thinks it's necessary, it will be a though one to push through.

[Weaponier]

I wonder if this plan does anything about the fact that the Appraisal Districts can raise your taxable appraisal at 30% over 3 years? At 10% a year that will wipe those cuts out VERY fast and the property owners will be back where we started at.

Then there is the whole problem behind paying to educate all those Illegal Immigrants.....

[Vaquero]

How about reforming the public intoxication laws while your at it.

[mnehrling]

From the look of the bill, it actually reduced some Business Taxes.. specifically the franchise tax..

There is a lot of shifting of tax burden and revamping of deductions, so I have a feeling this will take some digging into to understand the real story versus the rhetoric in the media.

http://www.rickperry.org/pdf/tax_reform_bill.pdf

[Flyer]

only those who voluntarily consume tobacco face the possibility of a higher net tax burden

Only those who voluntarily consume tobacco (purchased in Texas) face the possibility of a higher net tax burden.

I will refuse to be a pawn in the "Tax the Smoker" game.

[mnehrling]

Amen to that.. I have a friend who is fighting with the TABC right now because they say he was publicly drunk in a bar- when he had nothing to drink. He is just very obnoxious.

[pkajj]

The Texas Constitution does not prohibit a state income tax. The Republican Party platform advocates this, but it's never been enacted.

[el_texicano]

"Then there is the whole problem behind paying to educate all those Illegal Immigrants....."

DING! DING! DING!!! Fixing this problem goes a long way toward fiscal responsibility, but that latter term is an anathema to politicos.

[OKIEDOC]

Thats my thoughts.

Politicians are always looking to stick it to the man, you the tax payer.

[mnehrling]

You are correct.. Need to clarify that... the correct reading of Article 8 of our Constitution prohibits any income tax w/ out a majority of voters approving.. in other words, the legislature cannot enact it on their own..

[Humidston]

Great plan - Tax all sinners at a higher rate. Smokers are evil so let's make them pay for their disgusting addiction!

And drunks. Hit the drunks. And Fat People. Nobody likes Fat people! Tax Taco Bell and Burger King. Tax evil french fries! And fried pies!

Maybe start taxing ugly people too. They take up entirely too much space on our planet.

Ahhhh, I feel better already.......... /sarc

[mnehrling]

Let's also add in my biggest disappointment with the bill.. it still keeps the TEA in power.. I give them the #1 slot with the problem with our education system..

Still, it could be worse.. what would Foghorn-Strayhorn and the Kinkster do? Talk about a mess...

[texgal]

There will be an armed insurrection before Texas has an income tax - citizens are strongly against it. It's in the state constitution that there is to be no state income tax in Texas.

The ever rising cost of education can be dramatically dropped simply by sending the illegals home. These kids who are out "protesting" and waving the MEXICAN flag can go back to their countries of origin and take their illegal parents with them.

The illegals who pack our emergency medical facilities should also go - they are a huge drain on the taxpayers.Another huge drain on our economy is maintaining ILLEGAL immigrant inmates in our prisons.

Every illegal found here in the United States should be automatically deported and refused reentry for any reason for at least the next 10 years. BUILD THE WALL, man it with armed National guardsmen, protect our coasts and shoot to kill anyone of any nationality attempting to invade our country.

National sovereignty is not a bad thing.

[mnehrling]

It's in the state constitution that there is to be no state income tax in Texas.

Texgal.. I clarified this in another post, but technically, Article 8(a) of our Constitution says there can be an income tax if approved by a majority of voters.. what this prevents is the legislature creating one on their own..

This reinforces our point to cut out the waste and bureaucracy (TEA for example) so we don't need to worry about fighting for funding all the time..

[Humidston]

If we allow the pols to frame the question we've already lost the game.

Pols are like shop-aholoics with $10,000 cash in their pockets. They're gonna run out fast and they're gonna be back for more. Count on it.

[texgal]

I agree. The voters must approve. I don't see that happening.

[kittymyrib]

Shoot...I was hoping Gov. Perry was too busy investigating whether the Dallas and Houston school districts were turning in fraudulent attendance numbers from the illegal alien schools whose students were not in attendance this week. The state of Texas certainly should not pay those schools for students who were parading their Mexican flags down the streets instead of being in the schools provided so generously by those taxpayers of Texas that our pretty governor is so concerned about.

[af_vet_rr]

It reforms the business franchise tax so more businesses pay for our children’s education while lowering the tax rate

I still feel it's just moving the numbers around.

If I charge you less in taxes, but for your employer I raise the taxes or change the structure in such a way, that the outcome is your employer or other business pay more of the taxes (i.e. the "more businesses pay for our children's education" part), then they are going to pass that on to you somehow.

It could be any of the following, take your pick about how businesses will make up their increased cost:
* Businesses pay less wages or give out fewer or reduced raises
* Businesses spend less on the goods and services they consume
* Business pass the tax increase directly to you through higher prices for goods or services.

It's like them converting the road in front of your house into a tollroad rather than raising taxes to pay for road maintenance. The end result is, you're paying more, it's just your not paying it all at once now, you're paying a little bit of it every day.

It does have one benefit though, if they keep shuffling the increased taxes or whatever you want to call them around, eventually they'll get a louder call for an income tax, which many politicians want, but they don't want to be the front-man calling for it.

[af_vet_rr]

And counting on smokers to provide tax revenue is a bad idea

and therein lies the other problem. You make it expensive enough for smokers (I don't care for smoking, but I feel sorry for smokers - Democrats and Republicans both have it in for them), there's going to be some percentage quitting, or getting their supplies from somewhere else (quick trip into Oklahoma to one of the Indian smokeshops for instance), which means the overall number of people buying tobacco products drops, which leads to a drop in taxes...not too smart to go after them.

[JohnnyZ]

It helps end the over-reliance on local property taxes to pay for our schools.

When the tax burden is at the local level it encourages local communities to restrain spending. Of course they have a lot of spending mandated by law and court order, too, and costs for state and federal bureaucracy.

Some good things in this plan, though.

[JohnnyZ]

I wonder if this plan does anything about the fact that the Appraisal Districts can raise your taxable appraisal at 30% over 3 years?

If your property doubles in value they should raise the appraisal 100%.

If you're going to tax property, you have to tax the current value of the property, or you're giving discounts to people whose property appreciates and penalizing people whose property does not.

But of course if you're the one whose property doubles in value, you don't care much about fairness, just shifting the tax burden to someone else.

[TXBSAFH]

You know what happened to the last legislator who seriously proposed a state income tax in TX? Don't know? Well you are not alone, he has been missing for almost 10 years. Rumor has it he is currently seving the state by replacing an approximately man sized piece of concrete in US 59 between Houston and Cleveland. ;)

[sockmonkey]

The illegals who pack our emergency medical facilities should also go - they are a huge drain on the taxpayers.

I was wondering how much the 11 illegals who crashed the stolen truck they were in yesterday in Zavala County and were taken to Uvalde to the Hospital cost the taxpayers.

[pkajj]

I don't doubt that. It's usually the handful of minority State Reps. that propose a state income tax. They know it's DOA, but it plays good for the "homefolks". The idea of a progressive income tax (redistribution to groups who will vote for Democrat candidates) is at the heart of the Deomocrat philosophy of governing.

[Weaponier]

If your property doubles in value they should raise the appraisal 100%.

If you're going to tax property, you have to tax the current value of the property, or you're giving discounts to people whose property appreciates and penalizing people whose property does not.

But of course if you're the one whose property doubles in value, you don't care much about fairness, just shifting the tax burden to someone else.


This 30% increase is what the local Appraisal Districts use to set your tax rate on your home. It is NOT based on the open market value, but what some pencil pusher decides to set it as.

If you want more info on the whole appraisal mess/process visit www.clouttexas.com

[sinkspur]

If you want more info on the whole appraisal mess/process visit www.clouttexas.com

LOL!! You use a special-interest website for factual information?

I work with an appraisal district in software design and will relate the appraisal process as gleaned from the Chief Appraiser:

Values are ascertained by reviewing the selling price of the last four homes in a subdivision, any additions or improvements to the property as observed by satellite photo or from permits, and the previous appraisal.

An appeals process is mandated by state law that affords any homeowner who feels his property is overvalued the opportunity to appear before an appraisal board and make his case.

Of course you know that once you reach 65, your home's value is frozen for tax purposes.

I've appealed my appraisal twice in the last 20 years: won one and lost one.

[JohnnyZ]

It is NOT based on the open market value, but what some pencil pusher decides to set it as.

And you can appeal your valuation, yadda yadda yadda, not interested in people whining about what a burden it is to be financially successful. I am too, and you don't see me crying.

[K-oneTexas]

Thank you. When I read an earlier comments I hoped someone had found the info already. The income tax though not unconstitutional must be passed by referendum ... majority vote of th people who will pay it. May or may not happen ... depending on the Legislature agreeing on a referendum and then of course how many voters actually show up at the polls.

Also the article talks about being applied 'in a manner consistent with Federal law.' If Congress would pass the FairTax and abolish the federal income tax (and the IRS) then there would be no controlling statute. Unless the FairTax would be adopted at the State level. This is a consumption tax and not an income tax and unless the Texas Constitution was amended ... again