by Gerry Birnberg
Chair, Harris County Democratic Party
A good friend whom I respect and admire greatly just told me he read my recent post about the vote on HB3 and thought I was saying that I support that legislation. I was aghast. Let me be absolutely and unmistakably clear: HB3 is a terrible piece of legislation which (for the most part) is contrary to the values of the Democratic Party and must never be permitted to become law.
HB3 raises taxes on anyone making less than $100,000 per year. The Bush tax cuts have already favored tremendously the very wealthiest among us at the expense of the rest of us. Now HB3 seeks to do the very same thing at the state level - give a big tax cut to millionaires by raising the taxes the rest of us must pay.
How does HB3 accomplish that? It lowers state property taxes, but then raises state sales taxes by the same amount. Now, for many of us who are fortunate enough to own homes, property taxes on our houses are indeed too high, and should be reduced. But that can be accomplished by increasing homestead exemptions or limiting taxes on owner-occupied residential properties, especially on those having values of, say, less than $500,000. If we did that, we wouldnâ•˙t have to raise sales taxes (probably at all, but at least not to 9Âπ%). But HB3 lowers property taxes on all property - including commercial as well as residential property and on properties (like shopping centers or office buildings) worth many millions of dollars, and replaces those taxes with revenue generated by increasing sales taxes to 9Âπ% - the highest in the nation. So, your sales taxes go up by over 12% to give the Walmarts and the Trammel Crows of this state a huge reduction in their property taxes. Tax the middle class and the poor, this bill provides, to pay for tax cuts for big corporations and the wealthy.
Lots of Texans will never see a dime of tax relief from the property tax reductions: if they live in apartments, the landlord gets the tax break, but they donâ•˙t. On the contrary, their taxes go up, because they will have to pay more sales tax to finance the tax cuts for the apartment complex owners.
So how does a legislator like a Joe Nixon, for example, explain to his constituents why he voted for this bill? 62% of Nixonâ•˙s constituents live in apartments and so they wonâ•˙t receive any benefit from the reduction in property taxes - only their landlords will. Yet their sales taxes will go up to 9Âπ% because of the bill he voted for. The real reason he voted for this bill is that his Republican leadership told him to - not because itâ•˙s good for the constituents he supposedly represents (it isnâ•˙t). Quite simply, he sold them out.
And as far as business taxes are concerned, HB3 creates a new tax on jobs to replace the current tax on businesses. Big companies will no longer have to pay franchise taxes; instead, small businesses will have to pay a tax on each employee on their payroll. I guess the Republicans in the state legislature think we have too many jobs in Texas, so they have decided to tax payrolls instead of corporate profits (which is what the franchise tax does). And if wages are income (and they are), HB3 creates a state income tax, since it imposes taxes based on how much money wage-earners make (up to $80,000 per year; earnings over $80,000 per year are exempt from this new tax). At all events, it ainâ•˙t right in my book to pass a tax on wages to pay for a reduction in taxes on corporate profits. But you see who gets the shaft here - working men and women - and who gets the goodies - big business and wealthy executives.
Now all this might be acceptable if it raised revenues we could use to improve education in this state or to provide health care, for example. (Notice I said might.) By and large, Democrats are willing to sacrifice to achieve those objectives, even if it means foregoing some tax cuts. But that isnâ•˙t the effect of HB3. It doesnâ•˙t raise one penny more for education or health care (or any other government program) than the current tax structure. It simply changes the tax burden to make poor and middle class Texans shoulder more of it, without increasing the pie one dime. Whatever taxes are raised by raising sales taxes to 9Âπ% are used to reduce property taxes (including for commercial properties and mansions). Whatever revenues are realized from the jobs tax go to relieve corporations from the franchise tax. Thereâ•˙s no new money for education or health care resulting from HB3. Just an increase in the taxes most Texans pay in order to give tax relief mainly to folks and corporations who donâ•˙t need it.
If there was any confusion about where I stand on HB3, let me be perfectly clear: this bill is a travesty, an abomination, an unmitigated rip-off, and an outrage - just what youâ•˙d expect from a House presided over by Tom Craddick.
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