Tag Archives: Sales Tax

Dan Patrick Would Blow up the Texas Senate Just Because he Can

A very desperate Lt. Gov. Dan Patrick (not his real name) threatened to use the so-called “Nuclear Option” to cram through a deeply flawed property tax bill that will shift the tax burden even more on to lower income Texans.   Here’s the deal, under long-standing Senate rules to take up debate on legislation, three-fifths of the Senate, or nineteen senators, must vote to move forward.  Patrick has warned that he will throw out the three-fifths rule.  This is called the “Nuclear Option” because it will destroy decades of tradition in the Senate, a body that has served as bulwark against bad legislation because the three-fifths rule requires consensus-building and reaching across the aisle.  Feckless Republican leadership was ready to go along with Patrick.

But on Monday, hold out Sen. Kel Selinger (R-Amarillo) relented and allowed the bill to come to the floor for debate despite his strong opposition to the substance.  It seems that Selinger (one of the only Texas Republicans with any backbone) was willing to allow bad legislation to proceed in order to preserve Senate tradition.  Selinger likely recognized that Patrick’s petulant behavior was the bigger danger in the long run than debating a very flawed tax bill.  Patrick could have won a pyric victory by exploding Senate consensus – a move that would have long term consequences should the Democrats ever regain power.

And the legislation itself?  Patrick’s bill would have capped property tax revenue growth for local governments, special taxing districts and school districts at 2.5 percent a year, a threshold that many local government officials have said is way too low and will negatively impact their ability to provide critical government services like police and fire protection.   As a compromise to get Selinger on board, the proposed legislation now sports a 3.5% annual cap.  In any event, local governments could exceed the cap with voter approval.  The real kicker, however, is the likely tie into a yet to be filed bill that will increase the state sales tax by 1%.  That is the most regressive form of taxation and will likely pass.

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Sales Tax Revenue Declines

For the first time in 5 years, Texas sales tax revenue has declined.  Texas Comptroller Glenn Hegar thinks that it is a mere dip and does not presage a continuing drop. Matthew Waller of the Corpus Christi Caller-Times has more.

Glenn Hegar announced he was distributing $610 million in monthly sales taxes, which year over year is a 1.2 percent increase.

However, Texas’ chief financial office said that state sales revenue in June was $2.2 billion, a 1.4 percent decrease compared to June of last year.

“This slight decline was expected due to the slowdown in the oil and gas mining sector, and is in line with the biennial revenue estimate presented in January,” Hegar said in a release. “Receipts from the construction, information, restaurant and services sectors continued to grow, however, which is a testament to Texas’ diverse and dynamic economy.”

Vance Ginn, an economist with the free-market Austin think tank called the Texas Public Policy Foundation, said this isn’t an indictment against the “Texas Model,” reasonable regulations, low taxes, low government spending, not conducive to frivolous lawsuits, and so on.

“Part of that (decline) is just going to be the natural slowdown,” Ginn said. “A lot of this was already forecast, budgeted in.”

The incident is “more of a short-term blip,” he said. “We definitely had slower job creation from the drop of the oil price.”

Abbott and Legislature Miss the Mark on Real Tax Reform

The illusory tax reform package cobbled together by the House, Senate and Gov. Gregg Abbott promises to deliver almost nothing in the way of real tax cuts for average Texans.  The House plan to cut the state sales tax would have actually put money back in most Texans’ pockets.  The illusory tax reform of increasing the state school tax property exemption by $10,000 will likely never put another nickel in anybody’s hands.  The additional exemption is very likely to be eaten up quickly by rising appraisals.  And while you can argue that taxpayers will be paying less than they otherwise would, the bottom line is that no real savings are coming from this deal.  The Tea Party has failed to deliver any meaningful tax relief to the average Texan.

Get Your Tax-Free Guns

The Senate has approved Senate Bill 228  which designates one weekend a year where as a tax-free holiday for gun sales.  The bill sponsored by Sen. Brandon Creighton (TP-Conroe) exempts  firearms, ammunition and hunting supplies from sales tax during the last weekend in August.  Creighton calls it a Second Amendment tax holiday weekend.  Part of the rational for the sales tax exemption stems from a similar tax holiday that occurs one week earlier in Louisiana.  Proponents claim that Texas businesses near the Louisiana border lose considerable sales because of the tax disparity for that one weekend.  The Legislative Budget Board estimates that Texas will lose over $3.5 million in sales tax revenue each year if Creighton’s bill becomes law.