Wednesday, August 2, 2017

#TXLEGE: Bonnen holds productive hearing on alternatives to property taxes....

"But the former governors who were before me laid burdens on the people, and took from them bread and wine, besides forty shekels of silver. Yes, even their servants bore rule over the people, but I did not do so, because of the fear of God."
Nehemiah 5:15

"replace the property tax system with an alternative other than the income tax and require voter approval to increase the overall tax burden."
Republican Party of Texas, Legislative priority #5

[Note: The hearing can be viewed here; our first testimony can be viewed very early, the second is about two and a half hours in.]

Something happened this afternoon that, in a few years, we might look back on as a significant turning point in the discussion of taxes in this state: For the first time ever, the House offered attractive alternatives to the Senate's property tax proposals.

The House ways and means committee heard seven bills this afternoon, of particular note are these five:
  • HB 82         Darby | et al.
    Relating to the abolition of school district maintenance and operations ad valorem taxes.
  • HB 285        Murr                 
    Relating to elimination of certain property taxes for school district maintenance and operations and providing public education funding through an increase in the state sales and use tax rate.
  • HB 301        Krause               
    Relating to the substitution of a local sales and use tax for property taxes imposed by certain local governments; authorizing the imposition of a tax.
  • HB 358        White                
    Relating to supporting public education funding through an increase in the state sales and use tax rate and requiring a reduction in school district maintenance and operation ad valorem taxes; making an appropriation; increasing the rate of a tax.
  • HJR 21        Darby | et al.       
    Proposing a constitutional amendment abolishing school district maintenance and operations ad valorem taxes.
All of the bills would, in some form, substitute sales taxes for some portion of property taxes.

We testified "ON" two of the bills (we also signed up in favor of the Darby constitutional amendment/bill, but didn't stick around to testify).  We LOVE this concept, we just haven't had a chance to read any of these bills.  And that's our only hesitation in the context of the current special session.

Any bill that would authorize this sort of tax swap would, by definition, be big and complicated.  And any bill that would be this big, and this complicated, would need to be thoroughly vetted for unintended consequences by a team of lawyers.  Also, anything this big and complicated would produce a lot of opinions over how it could be most effectively implemented.  Thus, an open process is necessary for widespread buy-in.  Therefore, we feel that it's a better idea to do an interim charge on this topic before taking action in 2019.

Furthermore, as just one example of the type of thorny political debates this sort of tax swap would create: Broadening the base on the sales tax means you're going to be paying sales taxes on your grocery bill.

But assuming both the substantive and the political issues could be resolved in a way that produces a reasonable amount of buy in from the general public, we could absolutely get behind this sort of effort.

[Note: None of this is to suggest that anything short of automatic rollback elections is sufficient for the current special session.  That still needs to happen.  While we commend the House for finally offering an attractive alternative, the Senate are the ones who've been working on this issue for months and it's their plan that needs to pass for the current special session to be judged a success on this issue.]

Bottom Line: The road to making this sort of tax swap work will be long and winding.  Any journey down a long and winding road needs to be taken very carefully.  But all journeys, now matter how long and winding, begin with a first step and we commend Dennis Bonnen for taking it today.

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