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Texas Taxes
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Last week Kevin Drum was warning that Texas tax laws were going to become the model for national ones. A new bill was before the Texas House proposing changes in tax law. And it just passed the house.

What are some of the changes?


The original bill would have required all businesses to pay a 1.15 percent tax on wages. But lawmakers worried that the plan relied too heavily on large employers, so today they added the option of letting businesses pay the current franchise tax — 4.45 percent of net income or 0.25 percent of capital — instead of the new payroll tax.

An estimated 83 percent of businesses now avoid paying the franchise tax through loopholes. Those loopholes would be closed by the measure.


Well that sounds pretty good, doesn't it?

But wait.


Most Texans would see their tax burden increase under the plan.


Why? Because the state sales tax is being increased.


Under the bill, the state sales tax would be increased from 6.25 percent to 7.25 percent and would expand to cover billboard advertising, bottled water, car washes and auto repair. Also Monday, lawmakers stripped newspapers from the bill, exempting them from the tax.

The sales tax also would be increased on auto and boat sales and rentals from 6.25 percent to 7.35 percent.

The legislation would levy an additional 3 percent tax on snacks such as soft drinks, chips and cookies. Lawmakers today rejected an attempt to include beer and wine in the snack tax.

Diapers would be tax free, but a nose job and other elective cosmetic surgeries would cost an additional 7.25 percent, under an another amendment that the House approved. Parking at medical facilities also would be tax free.


Because the bill also includes a property tax cut, which will benefit businesses, Drum sees this as a horrible case of cutting taxes on the rich and increasing taxes on the poor.


It's breathtaking, isn't it? This isn't merely a matter of everyone getting a tax cut but the rich getting a bigger one, this is literally a tax bill that openly cuts taxes on the rich and raises them on both the poor and the middle class — in a state with a tax system that's already one of the lightest and least progressive in the country.


First of all, being one of the lightest and least progressive in the country is a good thing in my book. I don't consider progressive taxation fair.

Secondly, they passed a tax bill that closes a loophole, making the tax laws more efficient, and relieving some of the burden on Texas businesses, while including mostly sin taxes--boat rentals and potato chips? Cosmetic surgery and billboard advertising? The overall sales tax increased 1.15%, but is this really cause for invoking the poor of Texas being shouldered with a massive tax burden?

So you're gonna have to pay an extra dollar on that $100 stereo system at Wal-Mart. Wah.

And your Fritos are gonna cost 3% more. Instead, John Doe could simply buy, I don't know, an apple, and not have to pay the extra 3%.

But see, the real tragedy is where all this money is going. Why did those evil Texan Republicans raise taxes in the first place? To build giant pollution machines to pump mercury-laced smog into the air day and night? To fund Love Jesus centers?

Hmm...no.


The sweeping bill approved on a 78-70 vote is part of a package to overhaul the way Texas pays for public K-12 education.


The new bill generates $10.8 billion in additional funding for our $30 billion educational system. We're increasing education funding by over 25%, but Joe Blow's gonna have to pay more to rent a boat and people are gonna have to pay more for a nose job (are poor people getting nose jobs, by the way?).

I'm supposing, though Drum doesn't say, that he would be in favor of raising taxes and increasing funding for education, though he would most likely favor more "progressive" taxes...basically increasing taxes even more on businesses instead of distributing the tax burden across society.

Which is why I'm glad he lives and votes in California.


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