More on Texas Taxes for Education

[Updates below.]

State looks for tax options

Lawmakers considering how to revamp the state's school finance system on Thursday heard from tax ex-perts about firms that use loopholes to help them avoid paying state franchise taxes.

During the regular session, the Legislature failed to adopt a fix to the so-called Delaware Sub loophole that allows corporations to avoid paying millions in taxes every year.

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The state lost an estimated $163 million in revenue from some of the state's largest corporations that utilized the Del-ware Sub loophole in the 2003 fiscal year, said Deputy Comptroller Billy Hamilton. The lost revenue is a fraction of the $33.9 billion in state and federal funds allocated to public schools in the next biennium.

[...]

The loophole allows hundreds of businesses to avoid paying the franchise tax by incorporating on paper in a low-tax state like Delaware, and operating as a subsidiary in Texas.

© 2003 Texas Scripps Newspapers, L.P. A Scripps Howard newspaper. All Rights Reserved.

Legislators try to slice school taxes

Texas lawmakers on Thursday began wading into the murky area of taxes, searching for about $8 billion it would take to cut school property taxes in half while reforming the state's public education system.

An assortment of economists and tax experts will resume testimony today before the Joint Select Committee on Public School Finance, which wants to agree on a plan that legislators could debate during a special session next spring.

So far, commission members are not close to reaching a consensus.

I'd love to wade in there and sit in on the conversations. I doubt I'd be able to hold back from commenting after very long, though.

Many legislators want to cut school property taxes in half.

"Every survey of taxpayers that's ever been done shows that the property tax is, by far, the most hated tax that anybody pays," said John Kennedy, senior analyst for the Texas Taxpayers and Research Association, a business-supported group.

Damn straight. It's a tax on living independently, it discourages homeownership, and it diminishes our wealth.

The state's sales tax rate of 6.25 percent is already the fifth-highest in the country, and attempts to broaden the base by taxing services, such as child care, car repair, media advertising, laundry, legal, architectural, engineering and accounting, would provoke noisy opposition.

The state's main business tax is the franchise tax, which has been characterized as a "voluntary" tax because an ever-growing number of companies restructure their business to avoid the tax.

"The present system lacks balance. Ideally, a tax system would rely equally on property, sales and income," said Linda Dickens, state tax manager for Texas Instruments.

In my opinion, a system superior to our current one would replace the property tax with a different sales tax. Of course, that would have to be accomplished along with a downsizing of Texas state and local government the likes of which hasn't been seen and is rarely envisioned. Ditching state-funded education is the cornerstone of the idea.

Texas could solve its public school finance problem by adding a personal income tax, which also would reduce school property taxes by 90 percent, said Dick Lavine, a senior analyst for the Austin-based Center for Public Policy Priorities.

An income tax would benefit 60 percent of Texans, and only families making more than $125,000 would pay additional taxes, Lavine said. An income tax would provide an $11.5 billion property tax cut while increasing school spending by $4 billion, he said.

A Texas income tax would be wrong, no matter how you tilt the system against the upper classes. And anyone who uses a "they have extra, so they should be the ones to pay" arguement loses all respect with me.

But most lawmakers don't support the idea.

"It's an interesting subject, but it's sort of like tilting at windmills. It's not going to happen," said Rep. Fred Hill, R-Richardson.

Copyright © 2003 El Paso Times, a Gannett Co., Inc. newspaper

I take comfort in the reassurance, Representative Hill, but the history of this country and the people in it have demonstrated individual rights are far from safe.

Overall tax picture examined in effort to fix school funding

After a decade of fighting over how the school finance law works, property-rich and property-poor schools can now agree that the system is broken. With time running out before districts must make drastic cuts, the select committee on school finance looks at all taxes - including the income tax - for a better way to pay for schools.

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The state pays for just 38 percent of the cost of running schools. L ocal property taxes cover the balance. But, there's little room left under current law for schools to raise the money they need.

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No one wants more taxes, but school money problems won't go away.

©2003 Belo Interactive

They'll go away when we stop deluding ourselves and privatize education and pay for our tuition.

UPDATE(4/9/2004 12:49pm)
Oppose all state income tax plans!

Posted by Drizzten at December 05, 2003 06:28 PM