Taxing Issues in Texas: Too Important to Rush

Two major tax plans are under consideration in Austin and will impact all taxpayers across the state.

Higher sales taxes and taxing services each have consequences that affect taxpayers, jobs, and the state economy.

The Senate school tax plan, while well intentioned, may have some devastating unintended consequences on the state’s economy. Let’s look before we leap.

The Senate has proposed a substantial cut in property taxes in their school finance tax plan. But in conjunction with the cut in property taxes, the Senate has proposed expanding and increasing the sales tax. On net, it is not evident that Texans would be better off under the new plan. We need time to analyze the impact of the proposals.

In exchange for lower property taxes, the Senate has proposed to increase the sales tax and broaden its application to cover services, which are not currently taxed. But, if it is such a good idea to expand the sales tax to services, why in 1990 did Massachusetts (no haven for lower taxes) enact and then immediately repeal a similar measure? And why during its 1987 session, did the Florida legislature broaden its sales and use tax and — when that triggered protest — repeal it and raise the sales tax?

The House Ways and Means committee is considering some franchise tax legislation that should be sent immediately to the round plastic filing cabinet. This would tax over 100,000 partnerships, business trusts, and other entities. It’s a new tax and it’s even retroactive.

Some businesses are exempt. Businesses like lawyers, doctors, dentists, and optometrists. Others are taxed including opticians, pharmacists, funeral directors, plumbers, and barbers. Funeral directors? Taxing funerals?!

Changing any tax system will require a careful evaluation of the impact on the taxpayer, on job creation, and on the economy as a whole.

We should say “thanks but no thanks” to the tax plans before the legislature now. Let’s slow down and do it right.