Posted on 05/18/2006 6:52:36 PM PDT by Dubya
IRVING — Republican Gov. Rick Perry signed into law today legislation that restructures the state business tax to help pay for public schools and accompanies a major property tax cut.
The measure is a major component of Perry's plan to revamp the way Texas pays for public education before a court-ordered deadline of June 1. The new law will help deliver a record $15.7 billion property tax reduction over three years, Perry said.
"It is the largest of its kind in America and significantly reduces the impact of Robin Hood," he said, referring to a state system that distributes some money from wealthy districts to poorer ones.
The measure is one of five school-finance bills passed during a 29-day special session that adjourned Monday.
"Our entire school finance plan will lead to better schools, a stronger economy and a better future," he said before signing the bill.
The law establishes a $3.4 billion tax expansion for next year and changes the state's business tax so more companies have to pay it.
Perry praised the law as a reliable source of funding for schools and fairer to employers than the previous loophole-ridden franchise tax.
The old tax system allowed businesses with good accountants to avoid paying taxes, meaning other businesses carried an unfair load, school districts struggled and local school property taxes skyrocketed, Perry said.
Assorted business groups, including manufacturers, retailers and service industry companies, endorsed the new business tax.
The legislation levies a tax on 1 percent of a company's gross receipts while retailers would pay at a rate of 0.5 percent. It allows deductions for either the cost of goods or employee benefits such as salary and health care.
Perry said the deductions serve as an incentive by rewarding businesses for offering additional benefits to their employees.
Businesses who hire illegal immigrants couldn't claim those tax deductions and face federal sanctions. However, policing for companies who hire undocumented workers would remain the federal government's responsibility.
Sole proprietors and general partnerships are exempt from the tax, as well as businesses whose gross receipts total $300,000 or less and those whose tax bill is less than $1,000.
Independent gubernatorial candidate Carole Keeton Strayhorn, also the state's chief financial officer, criticized the tax measure. While it requires some 200,000 additional businesses to pay taxes, it doesn't pay for the promised property tax cuts, she said.
The $2,000 teacher pay raise is small, and the property tax relief would vanish quickly, Strayhorn said in a release Thursday.
"This law leaves Texans with a $23 billion hot check," she said. "It is bad public policy, and I will blast it off the books after I am elected governor."
On Thursday, Perry said some of those opposing the plan are trying "to keep from paying their fair share."
Republican Rep. Dan Branch of Highland Park said any problems in the bill can be addressed in the 2007 legislative session because some businesses will have had a chance to analyze its effects by then.
State Rep. Jim Keffer, an Eastland Republican who sponsored the measure, joined Perry for the bill-signing in Brownwood. Then Perry planned to travel around the state holding ceremonial signings of the same bill.
The governor hasn't yet signed any of four other bills in the school finance package, which include a $2,000 across-the-board pay raise for teachers, more teacher performance bonuses and additional money per high school student.
Under the school finance plan, property taxes on the average-priced Texas home would drop by nearly $2,000 over the next three years.
Districts would get to keep nearly a $1 billion more from property taxes by 2008. Also, many districts wouldn't have to pay in some of their tax revenues to the state.
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The business tax bill is HB3.
Why couldn't the state have raised the sales tax to fund education? Is that prohibited by the constitution?
Personally, I live here and my property tax estimate went up over $1,000 over last year, so I'm thrilled that it will be coming down. The biggest compaint I've heard is that the business tax will be passed down to the consumers. That's honestly okay with me because there are a lot of "consumers" out there that don't pay any property taxes.
I hear all this bitching and bellyaching, but nobody steps forward to over a viable alternative.
Lots of big talk from you, BobL, as there always is, except when it comes to offering solutions.
Here in Harris County, we conservatives are now convinced that Dems (or anyone else) must be put into power
This redaction and revision might get the length back to normal:
Here in Harris County, we conservatives are [I] now convinced that Dems (or anyone else) must be put into power
The royal "we" is a dead giveaway. Just trying to be helpful. Nobody with any credibility on this site uses the term "we" as a synonym for "I." Nodody. And some on this site have credibility, as to the honesty of their posts, and some don't, even when there is disagreement. And most with any tenure on this site know who is in which category.
YUp. You don't think the criminals in Austin will allow themselves to be taxed do you?
Don't tax you, don't tax me, tax the man behind the tree. No, that is not original with me. That is from Russell Long. The aridity of serious policy debate, which often is the case on this site, is disappointing. But this site is still simply splendid. The wheat is well worth enduring the chaff.
He's got the same marketing team, as a matter of fact.
Is it a desireable thing? No.
But nobody seems to be able to come up with anything except "spending cuts" (nobody ever says where) or sales tax increases (which are just as onerous as a business tax).
The money to fund Texas schools has to come from somewhere, and it's not going to magically appear out of slot machines or lottery tickets (as Carole Keeton "Ma" Strayhorn advocates).
It was *supposed* to be the Lottery. I don't know what happened with that, because I don't play it.
The Texas lottery has been losing popularity for the last eight years.
Lotteries and gambling and surpluses are variable and cannot be a source of stable funding for anything.
You won't get an answer. But this near atheist Wasp thinks slots and lottery tickets are Satan's work. They prey upon the poor and the addicted, and cause ever more to be addicted. It's evil. The issue causes some very recessive Calvinist genes in me to come out.
If someone's home value goes up $50,000 or $200,000 or whatever, why would they bitch about paying an extra $1,000 in property taxes, when they just got a windfall in net worth and borrowing power?
I'm not being argumentative; I'm asking sincerely, why is this a problem?
They would tell you, for the same reason that they bitch about paying higher income taxes because they suddenly made an extra $100,000 last year.
That's how I feel about it, too. Nothing makes me sicker than having the Lottery numbers touted every evening as the top news story on the local TV news.
Again, that was because it was supposed to be a boon to the school systems, as to why they still do this - like it's a "public service announcement." For the children.
Governor Hunk? But he's soooo photogenic!
That's what I figured, but I was hoping there was some other reasoning I hadn't considered. I guess it's like Barbra Streisand the other day glomming free tickets to some concert or something that she didn't want to pay for.
The home owner is paying annual property taxes on an unrealized gain. It's analogous to forcing stock holders to pay taxes every year on stocks they hold for many years that go up in price but are not sold.
For many older people who have very deep roots in a home and community, raised a family and want to stay there after retirement, their home is a lifestyle asset and not viewed as a financial asset to be leveraged to take on more debt. In fact, the primary goal is to reduce debt in later years of life. For these people, an escalating home value is meaningful only to the heirs of their estate, but the annual property taxes come directly out of their income used for living expenses.
Especially for retired persons under age 65 living on fixed income, escalating property taxes can have a direct, negative impact on quality of life. Financially speaking, even without a state income tax, Texas is not among the most desirable states for retirees because of the high property taxes.
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