By J. Lyn Carl, GalleryWatch.com
Austin, TX –
No sooner had he finished his remarks encouraging fellow House members to help him "make history in Texas" with the "largest reduction in property taxes ever," Rep. Jim Keffer (R-Eastland) saw familiar faces lining up at the back microphone to speak against his HB 3, the property tax relief bill.
After Keffer expounded the virtues of his bill, opponents began to ask if the revenues it would create would be a short-term fix, if it was fair and equitable and if it would indeed close business tax loopholes.
Keffer said his bill provides $5.4 billion in property tax relief on school maintenance and operations (M&O) tax rates, provides a "firmer, fair and simpler" economic foundation for Texas as a whole and for the state's public schools.
Keffer said his bill:
- Cuts M&O taxes by one-third
- Protects against future property tax rate increases
- Reforms and improves the franchise tax for businesses
- Modernizes and simplifies the state's tax system
- Protects and enhances job creation
Saying the existing tax system is "broken, dysfunctional" and a "throwback" to when Texas was overly reliant on land and cattle, Keffer also pointed out that some 83 percent of Texas businesses pay nothing in franchise taxes. He said corporations can avoid that tax simply by "filing a little paperwork." The current tax system, he noted, is putting an increasing burden on families "struggling to pay higher and higher property taxes."
Keffer said the current tax system undermines home ownership, penalizes manufacturing and real estate and other job creators. He said HB 3 is revenue neutral, with tax cuts and revenues "balancing out." It also puts state revenues and school funding on a "firmer, more stable" footing for the future and will "better reflect the economy of the future" for Texas.
"HB 3 says everyone ought to pay a little," said Keffer. "We all ought to be helping pull the wagon. It's the fair thing to do."
Saying his bill would provide an immediate 33 percent cut in the state's school property tax rates, from the current cap of $1.50 down to $1 per $100 valuation, Keffer said the new system also "replaces the existing, broken, lousy" franchise tax system with a "reformed" franchise tax. It also provides for an additional tax of $1 on a pack of cigarettes, a tax on certain snack foods "of little or no nutritional value" and increases the consumption tax. The Eastland lawmaker said his bill also will "jump start personal income, investments and job creation" in Texas.
Citing figures from the State Comptroller, Keffer said the fiscal note on his bill indicates that by 2007, Texas would see $2 billion in personal income growth, $3 billion in investment growth and see 48,0000 new jobs created. He said Legislative Budget Board figures also indicate the bill will reduce the tax burden on agriculture, mining, manufacturing, transportation and real estate industries.
The biggest winner, said Keffer, will be "Texas homeowners - working families."
Noting that tax reform "never comes easy," Keffer said most people believe the "best tax is what you pay and I don't." But he said HB 3 creates a simpler tax system based on a "simple concept that we all ought to be pulling the wagon together."
HB 3 will "bring about the largest property tax relief in the history of this state," said Keffer, encouraging his fellow House members to "go home a hero" by voting for legislation that would increase housing affordability and make Texas a more attractive state for business and investments.
Among those questioning Keffer regarding his legislation was Rep. Sylvester Turner (D-Houston), who noted that tax bills are "tough issues" that the legislature only contends with "every so often." He said he has concerns regarding whether he might have to come back in the near future and explain to his constituents why he might be having to vote for yet another tax bill.
While the bill is said to be revenue neutral and is designed to offset the property tax reduction and serve as a stimulant to the economy, Turner warned that, "All those hypotheses must be correct for the state to stay afloat." He said he did not think this bill would allow much "wiggle room."
He said he fears that after raising the state sales tax to the national average through this bill that in two years he might be having to again look at the business community, or the real estate industry, or professionals or homeowners and say, "We must tax you again because we didn't' go as far as we should have gone, or we gave you more than we could afford," and in the end have to vote on another tax measure.
Keffer said in deliberating on his bill, he tried to find a "recipe, a combination" to make sure that doesn't happen. He said one of his major goals was that whatever was done to "scrap a very dysfunctional franchise tax," that Texas would not go down the same road that California did - overtaxing and forcing business to leave the state. He said if the "core is healthy," it radiates up to all other levels and that under HB 3 the core will be extremely healthy.