Taxation, Texas, James Moore, Don't Grow Texas
The people promoting Texas as a location for business constantly push the idea that the state does not have an income tax. While that has some appeal, newcomers learn that there are property taxes that are almost punitive, and that force homeowners to carry the tax burden for corporations. Not only are corporations given huge property tax breaks by municipalities when they relocate to Texas, they are also being provided millions of dollars in tax money from the state’s Texas Enterprise Fund (TEF) to bring their companies to Texas. And homeowners are generally subsidizing this with outsized property taxes and valuations.
No one in the state legislature, or running for a statewide office, is ever going to promote a state income tax to offset property tax increases. But the high taxes on homes are a direct consequence of a legislature that historically refuses to accept constitutional responsibility for funding education.
For some of the above, I find myself in agreement with Mr. Moore. I've never been a fan of the Texas Enterprise Fund (or it's sister, the Emerging Technology Fund) and I'm not entirely a fan of providing businesses with full property tax credits considering their importance in funding basic state services. That said, I'm not a fan of the "soak the corporations" school of thought either, understanding that any taxes levied on companies is ultimately going to be passed back to the consumer resulting in higher prices which are a burden on the poor. Nor am I a fan of "soaking the rich". The general ideal in America has traditionally been that we have the opportunity to get rich. By punitively raising the tax rates on the wealthy we remove much of the incentive to improve financially. Calls for increased taxes on the wealthy are horribly pessimistic in that they assume the poor lack the ability to improve their condition and can only be drug up through government largesse.
What I do like are consumption taxes for the simple reason that, through budgeting and sound financial planning, they can be minimized. I'm also a fan of indexing certain tax rates to price (or CPI), especially commodity taxes. As prices increase the tax rate would decrease, and vice-versa. This would provide a price smoothing effect on the price which would make it easier for the end consumer to budget. It would also assure the State a more even revenue stream. I disagree with the idea that there's something wrong because a tax hasn't been "increased in 'xx' years". There's a certain negative inevitability in that thinking that runs counter to the idea of good governance.
The reality of all taxes however is that they serve two purposes, one financial and one political. Calls for blindly increasing funding in schools (In reality: Trying to solve the problem by throwing money at it) are almost purely political in nature. Neither designed to "fix schools" or "provide for the children" it's a pandering shot at voters from politicians trying to paint their enemies as heartless, vile creatures who want to return to a Victorian ideal where children work in factories or live in chimneys. This is patently false, but it makes for good press release and provides the Texas Lockstep Political Media with a convenient narrative for political columns and editorials. It also rallies the teacher's union vote who see pay increases and bonuses in their future.
Texas made a weak effort at solving some of this problem by passing a corporate income tax in everything but name. In the race for Lt. Governor State Sen. Dan Patrick has one big advantage over Lt. Gov. David Dewhurst in the Texas Margins Tax. That was a tax created for the sole political purpose of offering homeowners property tax relief. This savings was immediately eaten up by appraisal creep. With that in mind I also support appraisal caps. Five percent would be ideal. I also support tying current appraised value to sales price, especially on commercial properties, but on residential as well. Of course, to do this would require sales price disclosure which raises another thorny set of issues that might be unworkable in the current political environment. I think it goes without saying that I believe the Margins Tax should be repealed.
One item that's never given serious consideration when discussing education funding is the alarming increase in school district administrative staff. School districts, allowed to grow unchecked, are currently very top-heavy at levels that don't directly interact with students and are remarkably free from audit requirements. I would argue, at this point, Texas is lacking a true understanding of what it costs to educate one child. We see numbers thrown around but they have not been subject to any meaningful financial analysis. While I agree that most education decisions should be determined at the local level I think it's a fallacy to think that every school district is running at peak efficiency. This issue needs to be sorted out before any meaningful funding discussion can commence. At the present time, I'm unsure where (if anywhere) audit authority lies and this might require a legislative solution.
The taxation rates at the state and local levels seem to be as fuzzy as they are at the federal level, even in Texas where we consider ourselves a financial beacon. There is way too much corporate welfare in place, way too much uncertainty in the operational efficiency of our government entities and way too much rhetoric surrounding it all. Just as I don't think the answer lies in a program of cut & gut, neither do I see a successful future in raising taxes just because.
To me, the answer lies in finding some sanity in our tax code and coming to grips with all of the money we are spending, determining how it is spent, and making sure that our public servants are doing their best to serve the public, rather than building power bases from which to rule.
I'm sure many local and state government officials aren't interested in the opinions of this little blog (and some have told me to not voice my opinion) but I'm concerned that the TLSPM is not offering the public a full vetting of all sides of the issue. What we often see are news reports in the need to increase funding and raise taxes, never (except as the deranged rants of the fringe right) do we read of the need to audit and improve efficiencies. I think this is something that's been lacking in the debate to this point and it is an idea that needs wide distribution.
Will it make a difference? I'm pessimistic. I've a feeling most of a liberal persuasion will dismiss it out of hand and the conservatives might as well. Changing tax policy is hard and it requires a considerable amount of political will. Even mentioning the subject is enough to earn a politician a stiff primary challenger. However, in Texas I think we're nearing the limit of the amount of money we can reasonably expect to squeeze out of the homeowner and something needs to be done to both broaden the base and ensure that the money is spent wisely. In order to forward this I'm going to look for other writings on this matter and try to publish links from this blog. I also have more thoughts on tangential issues but, for now, I'll leave it at this.
