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Texas Matters: The Texas Tax Switcheroo

In early April, Governor Greg Abbott, Lieutenant Governor Dan Patrick and Speaker Dennis Bonnen announced that they will support a proposal to raise the sales tax in Texas and use those proceeds to cut property taxes.

If the plan is passed in the legislature the sales tax will climb one percentage point.

That means – including where the local sales tax option is maxed out at two percent – Texas will have a 9.25% sales tax.

It’s estimated that this will result in additional billions of dollars in revenue for the state and that could be used to offset the planned reduction in property taxes – which has become a hot button issue.

Representative Dan Huberty, a Houston Republican, filed the tax swap bill. He estimates the tax switcheroo could buy down school property taxes by 20 cents per $100 dollars in values. Which could save the owner of a home valued at $200 thousand dollars about $400 dollars a year.

The plan has plenty of critics and has drawn vocal opposition by mostly Democrats who say this pushes the tax burden further onto the backs of the working families of Texas. They will pay a larger share of their income in taxes, the wealthy will benefit and there are other places in the Texas economy where the needed tax revenue could collected.

Supporters of the plan say it will benefit the overall Texas economy and the businesses that experience a reduction in their tax bill will be able to hire more workers.

We are going to take a little hike into the weeds on this question. We’ll hear from both sides. Later we’ll get a take from the Texas Public Policy Foundation which applauds the plan. But first Dick Lavine of the Center for Public Policy Priorities tells us that this is a plan that hurts the poor of Texas while benefiting big business and the high income.

Copyright 2020 Texas Public Radio. To see more, visit Texas Public Radio.

David Martin Davies is a veteran journalist with more than 30 years of experience covering Texas, the border and Mexico.