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Our Opinion: Is Texas Becoming California?
8 months ago | 0 0 comments | 9 9 recommendations | email to a friend | print
Governor Rick Perry showed what little understanding he has of the most unfair and ridiculous Texas business tax yet devised when he extravagantly praised the puny changes made to it this week and denied that it makes some businesses pay more to Austin than to Washington.

“I don’t know what state they’re in – they’re obviously not in Texas,” he said when our reporter George Hatt asked whether a state Republicans call "business friendly" should demand higher taxes than the federal government.

Sorry, that does happen right here in the Great State of Texas. This is how it works, Governor:

Because the Texas Franchise Tax is primarily based on income and – unlike federal income taxes – doesn’t consider most expenses, a business can lose money and still owe thousands. The same business would usually owe nothing to the federal government.

Similarly, a profitable business with high income and high expense will pay a greater percentage of its profits in state taxes than in federal taxes – in some cases, up to 100 per cent.

The changes the Legislature made to the tax were a weak sop to businesses. They exempt those with less than $1 million in annual revenue instead of less than $300,000. (The federal Small Business Administration’s definition of a “small business” is one averaging from $6.5 million to $31 million yearly.)

But wait a minute.

In two years, the threshold is cut back to $600,000!

The main beneficiary of the Legislature’s change seems not to be small business, but politicians, who – led by Perry – are now are bragging about the tax cut they’ve given us.

And by the way, have you seen that one-third drop in property taxes the Governor claims we’ve been getting because of the wondrous franchise tax?

The problem here is that the Republican party – in control of the governor’s office, the lieutenant governor’s office, the House and the Senate –admitted by action rather than talk that it can’t curb spending enough to truly change this outrageous and destructive tax.

State Sen. Troy Fraser, a Republican from Horseshoe Bay, agrees that the tax is “unfair” and was a “mistake,” but says undoing it is a “problem” because government is “addicted to the money that it generates.”

In other words, state government is willing to hurt Main Street merchants rather than pour less slop in its own trough.

If the state must rely on taxes its leaders know are unfair, it is time we demanded to know when they might try to operate with what they have rather than what they want. If you don’t own a business, don’t think you have no stake in this. You pay the price not just in higher consumer prices, but in the loss to your local economy when hometown money is sucked away by Austin.

It is time for our state legislators to tell us that they will join Republican State Sen. Dan Patrick of Houston in making reform of this abomination a top priority.

A good way is to ask them about that at every public appearance they make until they promise they will.

State Rep. Jimmie Don Aycock, the Republican whose district includes Burnet County, especially needs to hear from you. We invite him to go face-to-face with contractors and others who are particularly abused by a tax that he’s not ready to repeal even though it “will always be a problem…for particular industries.”

Representative Aycock, here’s an idea for you, the Governor and all your colleagues.

Try to make sure taxes fall equitably on all who pay them. And if that doesn’t produce enough to support everyone’s pet project, try this: Start living in the same world as your constituents – one where you operate without an “addiction” to money you don’t have. Then Texas may truly be “business friendly” and your Republican credentials can be renewed.

Who knows, maybe we can even stop Texas from becoming California.

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