Burnt Orange Report

Strayhorn Says HB 3 Doesn't Balance, Shapleigh and Rodriguez Push For Income Tax

By Andrew Dobbs

According to Quorum Report, Comptroller Carole Keeton Strayhorn has reversed course and declared HB 3 to be unbalanced. She says that the cafeteria-style business tax will simply invite continued tax avoidance on the part of businesses and will result in $2.3 billion in deficits. Every year that the tax plan is in place, the deficit will go up, and the tax cut becomes a huge tax increase for everyone- not just the poor and middle class as it now stands. House Republicans (and Mike Villareal, who is singing in that chorus again) dispute her claims.

So what is to be done? Well, my state rep- Eddie Rodriguez- and Senator Elliot Shapleigh of El Paso have put forward the plan they have been pushing for some time now: a state income tax. Here is the press release they put out earlier today:

The Texas Legislature must consider a state income tax in order provide Texas taxpayers with sustainable tax relief and adequate funding for schools, according to several more statewide organizations that joined two legislators Tuesday in an effort to raise discussion of the tax alternative.

Two weeks ago, the League of Women Voters of Texas joined Senator Eliot Shapleigh and Representative Eddie Rodriguez calling for an income tax to pay for public education.

On Tuesday, March 22, the Consumer's Union, the Texas Landowners Association and a group of individual realtors joined Shapleigh and Rodriguez in a press conference aimed at getting the state's leadership to put the discussion of a state income tax on the table.

"Increasing the sales tax or property tax is not a viable option,” Shapleigh said. “We need a new system to replace Robin Hood and we need to let the voters choose from all of the options. If we are to compete in a world based on knowledge, then we must do better than 32nd in the nation in teachers' salaries, 50th in number of high school graduates and 48th in average SAT scores."

Some members of the Texas House claim that the school finance plan passed out of the House last week will provide huge property tax relief, but a new analysis announced by Rep. Rodriguez shows that the tax cut provided by the House plan will quickly evaporate.

“Under the current plan, homeowners’ property taxes will be as high as they are right now within 4 years. That’s on top of the sales tax hike and new payroll tax,” said Rodriguez. “Only an income tax will permanently cut school property taxes by 90 percent and invest $5 billion a year in education. An income tax is a legitimate option, and it’s time to put it on the ballot for voters.”

Reggie James, director of the Southwest office of Consumer’s Union, said that the current plan is not fair for consumers.

“If the Legislature must raise taxes, then we ask that they find a way that is fair,” said James. “An income tax should at least be put on the table because it would be more fair than the other options we are hearing.”

Joe Bradley, a realtor from Lewisville, Texas said that realtors from his area agree that an income tax should be on the ballot for voters.

“I surveyed my fellow realtors from my hometown in North Texas, and a great majority preferred an income tax because it’s fair, and it’s good for the business climate,” said Bradley.

Realtors aren't the most liberal group out there, in fact they tend to be pretty conservative. And landowners' groups tend to be on the GOP side of most issues. Now that these forces have joined with nonpartisan types in the form of the League of Women Voters and some liberals in the Consumer Union, a broad-based coalition is finally forming to redo Texas' taxes the right way- with an income tax.

Appraisal creep is the biggest culprit in the way property taxes will simply jump back up, but the dozens of other taxes not touched by HB 3 and the significant ones raised by the bill add up quickly. Texas needs to get serious about education and serious about serving tax payers. Only an income tax will serve both interests. I'm proud to say that Eddie represented me well today.