Ken Paxton The Capitol Steps
Published: 02-13-09
The key to a strong vibrant economy lies not in handouts or bailouts but in sound and responsible tax fiscal and educational policies that encourage growth risk-taking and opportunity. During these tough economic times it is imperative that the Texas Legislature enact sound fiscal policies to help keep our economy strong and growing.
I along with my colleagues in the Texas Conservative Coalition have outlined our top fiscal policy priorities for the 81st Texas Legislature to help strengthen our economy. I have filed legislation to address some of these issues which I will discuss more in depth in the coming weeks.
1. Significantly reform property tax appraisals and constitutionally dedicate a portion of surplus revenue to property tax relief. High and rising property taxes are a fiscal nightmare for many Texans.
Since a homeownership crisis is at the root of the current downturn in the economy urgent action must be taken to keep Texans from losing their homes. The best short-term policies are to alleviate the strain of appraisal increases by adopting proposals recommended by the Select Property Tax Relief and Appraisal Reform Committee and to make sure deposits into the Property Tax Relief fund are protected against being diverted to the general budget.
2. Raise the floor of the margins tax to $1 million guard against rate increases through a super-majority requirement and allow businesses to deduct expenses for contract workers. According to a survey in the Business Tax Advisory Committee report 71 percent of businesses reported an increase in their business tax liability under the margins tax.
More than a quarter of businesses surveyed reported a tax increase of 500 percent or more. The average cost to prepare margins tax returns was over $9000. Reports of tax complexity and increased compliance costs compared to the old franchise tax are cause for serious concern.
The impact of the onerous administratively burdensome and punitive margins tax could not have come at a worse time especially for small businesses. To keep our economy growing all small businesses with revenues of $1 million or less must be exempted and we must pass a super-majority requirement to guard against future rate increases.
Furthermore it is simply unfair that businesses that rely on contract workers cannot deduct those costs when calculating their margins tax liability. Contract workers are an important part of our jobs base and play an integral role in the economy. Tax policy should encourage job creation not penalize it. For the long-term we are working on alternatives to the margins tax that we intend to unveil in the 81st Session.
3. Employ greater fiscal restraint and protect the Rainy Day Fund. In the face of a slowing economy legislators must exercise the same restraint this year as we did in 2003 when faced with a $10 billion shortfall. We must not increase spending beyond necessary increases in public education and human services enrollment and should look for ways to reduce spending in extraneous programs. A revised tax and expenditure limitation is also vital to protect the state from the consequences of unbridled spending that has driven California to the brink of bankruptcy.
Furthermore we must not dip into the Rainy Day Fund except for one-time emergency appropriations that are directly related to Hurricane Ike recovery. The Rainy Day Fund must remain intact as a cushion against future shortfalls which Texas is currently not experiencing.
4. Use unexpended funds held by TEA to fund needed improvements in public education; also encourage the creation of two new Tier One universities and full funding for community colleges. The economic downturn underscores the importance of a sound K-12 education. Continuing to fund enrollment growth technical education programs and reforms to improve performance are essential to the long-term health of the Texas economy.
Additionally Texas must plan for the future by improving the capabilities of our higher education system which may include the use of incentive funding and the potential creation of two new Tier One research universities to serve our growing population. At the same time community colleges are playing an increasingly important role in higher education and should be fully funded as a gateway to better job opportunities.
