Oppose Rep. Eddie Rodriguez's Texas Income Tax Plan

[Updates below.]

Via Andrew D at Burnt Orange Report, I hear of Representative Eddie Rodriguez and his plan to impose a state income tax in order to solve the Texas school funding crisis. His website, Texas for Lower Taxes spells out the details:

The Rodriguez Plan shifts the entire burden of funding school operations from the local school districts (who collect the majority of your property taxes) to the State ... which will pick up the tab by using revenue collected through a State Education Income Tax.

The Proposed State Education Income Tax would produce about $19 Billion in new state revenue. This money would first be used to replace the most burdensome local property tax ... the Maintenance and Operations Property Tax (sometimes referred to as "The Robin Hood Tax"). This will still leave a balance of approximately $5.1 billion for two other key objectives.

abolish the State's Corporate Franchise Tax, and

provide Uniform Group Health Insurance for Teachers (and other public school employees).

[...]

Only the M&O Property Tax is abolished by this plan. The M&O tax represents about 85% of most local school taxes and it is the onerous component that drives up local taxes and appraisals. It is also the basis for the state's recapture provision, which distributes taxes from "wealthy" districts to "poor" ones.

The other property tax, I & S (Interest and Sinking), "covers long term debt (i.e. bonds) and other long term contractual obligations", according to the Travis County website. As such, it's a different legal beast.

The Maintenance and Operations Property Tax is a tax placed on:

• residential real estate - houses
  
• business personal property - furniture, inventory, and equipment
  
• commercial real estate - buildings used for stores, dwellings, offices, warehouses, etc.; it also applies to the land they sit on

The M & O tax has a ceiling of $1.50 per $100 of property value. Almost 500 of the more than 1,000 Texas public school districts have hit that ceiling and another 175 are within a dime of reaching that limit. In effect this establishes a statewide property tax, something forbidden under the Texas Constitution. This is why an increasing number of school districts are suing to get the current system changed: they're getting screwed from the tax wealth being redistributed from their "property-rich" districts to "property-poor" districts.

The Rodriguez Plan's income tax rates:

The Education Income Tax rates have been developed with the primary goal of spreading the burden of taxation fairly, based on a household's disposable income. Obviously, working families with very low incomes have very little disposable income. Their ability to pay taxes is lower than a high income family, both by dollar amount and as a percentage of their total income. For this reason, the Education Income Tax for Texas utilizes a progressive rate of taxation, based on total Adjusted Gross Income, which is sensitive to each taxpayer's disposable income.
A Personal Exemption of $3,200.00 is allowed for every filer and for each dependent declared by that filer. This is the only exemption provided.

On all remaining income the rate of the tax is:
1 % on the 1st $25,000.00
2% on the 2nd $25,000.00
3.5% on the 3rd $25,000.00
5% on the 4th $25,000.00
6.5% on the next $50,000.00
7.0% on the next $50,000.00
7.5% on additional income (all income above $200,000.00)

Democrats just love to fuck those people earning 200 grand and up the hardest, don't they?

I make $30,000 a year with my current job, before federal theft taxes and voluntary deductions for various employer-offered programs. So I'd roughly pay $200+ a year in this proposed state income tax. Which I don't support. Not too far back, I did support the idea of replacing the property tax with a different sales tax, but I no longer do. No taxes and no public-funded education are my goals.

Andrew D has this to say about the Rodriguez Plan:

My state rep, Eddie Rodriguez has made a very gutsy move by proposing a state income tax. While he's in no danger of losing his district (in liberal, majority Hispanic East Austin), this issue is still the Third Rail of Texas politics. Nothing evokes quite the demagoguery of this issue. Eddie is trying to cut through that nonsense and fearmongering with an honest and open look at what it would really mean for Texans.

The answer is that it would be a magic bullet- lower taxes for the vast majority of Texans with greater revenue.

[...]

Maybe if people learn how much they'll save, we can finally get some real revenue solutions for Texas.

I don't oppose these taxes on the grounds that they cost me X - Y dollars rather than X dollars. I oppose them because they are a forced transfer of wealth.

I live in an apartment, so I don't have to pay the hated property taxes directly, but I know people who do. Even if I did, I'd still be angry at being taxed to provide services to others whether I wanted to or not. An income tax plan is a giant step in the wrong direction.

The only people exempt from the Rodriguez Plan are those who make less than $3,200 a year. It would completely socialize the costs of education for wage earners in this state. It won't matter if you have children or not. I won't matter if you send your children to private schools. It won't matter if you never intend on having children. You will be forced to pay for the education of all Texans in public schools. That is immoral.

This plan shifts the taxation burden to a vastly larger audience. Currently, it's just imposed on homeowners and businesses. The plan expands the state's reach to practically every working adult. That's why Rep. Rodriguez and the plan's supporters can claim "tax savings."

Andrew D:

The website has a great little calculator on the front page that lets you find out how much you would save with the Rodriguez plan. a family of 4 earning $40,000 a year in a $120,000 that taxes at the current $1.50 per $100 value cap (which most school districts in Texas are at) would pay only $294 a year, a savings of $1,281! Even if you are a single person making $250,000 a year and living in a $1 million home, you would save $1,640 a year. Only the incredibly wealthy would see any raise in their taxes and even then, if they are paying corporate franchise taxes from their business, they would see savings there.

This isn't a "magic bullet" at all. It's simple economics. Each person pays less because more people are paying.

From the FAQ:

Although this figure varies widely across the state, for every $100.00 you now pay in rent, approximately $10.00 represents the cost your landlord must recover to pay the M&O property tax on your rental home or apartment.

That means I pay roughly $55 in extra rent to cover the M & O tax. That means I'd pay $150 more than I normally do. This is a huge Fuck You to the hundreds of thousands (if not millions) of apartment dwellers and people in assisted living residencies (65,000 in nursing homes alone) in this state.

Not only does this tax hurt more people, it also opens the door wide to future abuse. I can't think of a major government program (and this would certainly qualify) that didn't grow to screw larger and larger numbers of people over it's lifetime. "The power to tax is the power to destroy," said Supreme Court Justice John Marshall. The horribly destructive power of income taxes would be available for politicians to use for the first time in Texas. Give it a few years; perhaps a decade, and you'll have situations arise where politicians want to use the tax to pay for other things. Imagine a terrorist attack happening in the state and an investigation comes to the conclusion that first responders and emergency services needed more money to save more lives. BAM! Calls for using the income tax and for expanding it to pay for these services would increase. Any number of "reasonable" things would get tax attention. It just won't end. Skeptics should look at the federal government for affirmation of this.

I simply do not care if support is growing for a state income tax. The popularity of an idea does not translate into validity for that idea.

The Rodriguez Plan shifts the entire burden of funding school operations from the local school districts (who collect the majority of your property taxes) to the State ... which will pick up the tab by using revenue collected through a State Education Income Tax.

This is a LIE. The "state" picks up nothing. TEXANS will get stuck with the bill.

I hope this effort fails utterly, because it's a bad idea and it's packaged in dangerous clothing. If the debate is framed in the light of accomplishing tax relief for most Texans, it stands a good chance of passing. The debate shouldn't be about that. It shouldn't be about how to pay for public education.

It should be how to extract the State of Texas from education entirely and put the burden of financing education back on the individuals who want to benefit from it. This the only honest and just way of doing it.

UPDATE(4/9/2004 1:01pm)
Similarly, Governor Perry's school funding plans aren't any better.

Governor looks at variety of taxes to fund schools

Gov. Rick Perry proposed a new education finance plan Thursday in San Antonio.

The plan would add $2.5 billion to Texas public schools while simultaneously cutting property taxes by $6 billion.

The plan would reduce taxes through what Perry calls a ?constitutionally linked roll'' that would reduce the residential property tax cap by 25 cents and the property tax cap on commercial property by 10 cents.

"My plan includes a $1 per pack cigarette tax hike, fees on adult entertainment establishments, closing the franchise and auto sales tax loopholes to make them fairer and, if Texas voters agree, video lottery terminals in approved areas of this state," Perry said.

Copyright ©2004TWEAN News Channel of Austin, L.P. d.b.a. News 8 Austin

News8Austin and the AP compiled a list of the tax changes Perry would enact:

1. Video lottery at race tracks/lottery enhancements: $2 billion
   
2. Cigarette and tobacco tax increases: $2.4 billion
   
3. Surcharge increase on certain cigarette manufacturers: $134 million
   
4. Adult entertainment $5 minimum admission tax: $90 million
   
5. Close franchise tax loopholes: $714 million
   
6. Close auto sales tax loophole: $172 million
   
7. Tax revenue acceleration: $1.2 billion
   
8. Improve collection of delinquent taxes: $350 million

Some Republican you are.

UPDATE(4/28/2004 9:24am)
The proposed solutions for Texas school financing aren't any better.

UPDATE(4/28/2004 9:47pm)
Found the introductory text of the bill.

H.J.R. No. 9

A JOINT RESOLUTION

proposing a constitutional amendment that provides for the approval of an income tax adopted by the legislature, requires that a deduction or exemption to the tax that redistributes the combined tax liability be approved in a statewide referendum, and allows revenue from the tax to be spent on education and any other purpose.

BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 24, Article VIII, Texas Constitution, is amended by adding Subsections (b-1), (b-2), (b-3), and (k) to read as follows:

(b-1) A general law enacted by the legislature that establishes an exemption or deduction to the tax in a manner that results in a redistribution of the combined income tax liability among all persons subject to the tax may not take effect until approved by a majority of the registered voters voting in a statewide referendum held on the question of establishing the exemption or deduction. A determination of whether an exemption or deduction to the tax would result in a redistribution of the combined income tax liability among all persons subject to the tax must be made by comparing the provisions of the proposed change in law with the provisions of the law for the most recent year in which actual tax collections have been made. A referendum held under this subsection must specify the manner in which the proposed exemption or deduction would result in a redistribution of the combined income tax liability among all persons subject to the tax.

(b-2) If the legislature in a bill enacts a general law that imposes a tax on the net incomes of natural persons as described by Subsection (a) of this section, and, in the same bill, repeals another tax or fee, the legislature may not reenact the other tax or fee unless the legislature repeals the tax that was imposed on the net incomes of natural persons. If the legislature in a bill enacts a general law that imposes a tax on the net incomes of natural persons as described by Subsection (a) of this section, and, in the same bill, reduces the rate or base of another tax or fee, the legislature may not increase the rate or base of the other tax or fee unless the legislature repeals the tax that was imposed on the net incomes of natural persons.

(b-3) If the legislature in a bill enacts a general law that increases the rate of the income tax or changes the income tax as described by Subsection (b) of this section, and, in the same bill, repeals another tax or fee, the legislature may not reenact the other tax or fee unless the legislature repeals the increase in the rate of the income tax or repeals the changes to the income tax. If the legislature in a bill enacts a general law that increases the rate of the income tax or changes the income tax as described by Subsection (b) of this section, and, in the same bill, reduces the rate or base of another tax or fee, the legislature may not increase the rate or base of the other tax or fee unless the legislature repeals the increase in the rate of the income tax or repeals the changes to the income tax.

(k) This subsection is a temporary provision that expires January 1, 2005. The approval of this subsection by the voters at an election held November 2, 2004, constitutes approval of the imposition of an income tax adopted by the legislature during a regular or special session before that date.

SECTION 2. Sections 24(f), (g), (h), and (i), Article VIII, Texas Constitution, are repealed.

SECTION 3. This proposed constitutional amendment shall be submitted to the voters at an election to be held November 2, 2004. The ballot shall be printed to permit voting for or against the proposition: "The constitutional amendment that approves the income tax adopted by the legislature, requires a deduction or exemption to the tax that redistributes the combined tax liability be approved in a statewide referendum, and allows revenue from the tax to be spent on education and any other purpose."

UPDATE(5/4/2004 9:08am) I did some quick 'n dirty educational cost calculations of my own.

UPDATE(5/10/2004 1:25pm)
Another bad idea: a universal curriculum.

UPDATE(5/20/2004 1:13pm)
I've just discovered the perfect term for the economic reasoning behind taxing incomes: Pagare Tutti, Pagare Meno.

UPDATE (7/1/2004 5:40pm)
Having a few churches on your side doesn't change a damn thing.

UPDATE 11/9/2004 2:28pm
Eliminate the IRS...and Replace It with Nothing!

Tax Cuts Do Not "put money" in Our Pockets

Posted by Drizzten at April 08, 2004 02:39 PM