Perry/Craddick – Relentless Taxers, Absent on Education

Republican Legislators Champion New Taxes & School Cuts Democrats Vote NO
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Contrary to public and media perception, since gaining control of both the Governor’s mansion and the Texas State House, Texas Republican leaders have relentlessly championed one new tax increase after another. From bottled water and baby diapers to small business revenues to the internet, Republican leaders have pushed for new laws that would raise taxes on virtually every Texan.

Also, defying public perception, the large majority of Democrats in the Texas House have consistently opposed GOP efforts to raise taxes. In fact, over the last seven legislative sessions, Democrats have demonstrated that they are on the conservative side of the tax debate.

Although the current special legislative session was portrayed to the media and voters as a last ditch effort to address public education, the first order of business for Perry and Craddick was to prevent the proposed $5 billion Perry business revenue tax or the state’s $8 billion surplus from being used for public education. Instead, Perry and Craddick have used the special session to impose a new state tax with a net result of clobbering small businesses and middle-income Texans, while providing a tax windfall to Republican political allies in the Insurance, Financial Services and Real Estate industries. What’s more, Perry and Craddick are working to actually cut funding for education below the level promised by the legislature just last year.

Republicans Coddle Friends and Clobber Middle-Income Texans

The newest Perry/Craddick tax scheme is a three-step gambit being played out by the Republican leadership in the current Called Session.

  • Step One – HB1 hijacks the State’s $8 billion surplus by committing much of it to a property tax reform plan that grossly favors exclusive neighborhoods and large corporate property owners.
  • Step Two – HB 2 forbids the use of new revenues generated through a business revenue tax or cigarette sales tax to improve Texas public schools.
  • Step Three – HB 3 imposes a new Republican tax on the corporate revenues of Texas businesses.

(Source: The Houston Chronicle, April 25, 2006)

Net Result – Most Texans Lose, Perry/Craddick Political Allies Win

By preventing surplus revenues from being used to help schools and then alternately lowering some taxes while raising others, Craddick and Perry are able to disproportionately reward their high-income supporters in exclusive neighborhoods and their strongest corporate allies. Meanwhile, middle-income Texans are left holding the bag and footing the bill.

Insurance, Finance and Real Estate Industry – Win

Insurance, Finance and Real Estate industries are some of the big winners in the Perry/Craddick tax plan. They will see their taxes cut $67.4 million dollars under the new plan.

Tax cut realized through HB1 property tax provisions$227.5 mil
Tax increase through HB3 business revenue provisions$160.1 mil
Net Tax Benefit$ 67.4 mil

(Source: Legislative Budget Board)

Middle-Income Texans – Lose

The real losers under the plan are everyday Texans who work hard, pay taxes, and are in the middle income bracket. According to the nonpartisan Texas Legislative Budget Board, middle-income families earning between $43,403 and $67,019 will have their collective taxes raised by over $19 million. Meanwhile, families earning over $146,804 will have their collective taxes slashed by over $284 million. The average family income in Texas is $49,086. (Source: Texas Legislative Board, El Paso Times, May 2, 2006).

Household IncomeNet Tax Increase or Decrease
$43,403 to $67,019+ $19.4 Million
$146,804 or more– $284.2 Million

(Source: Legislative Budget Board -Tax Equity Notes ,HB 1 and HB 5)

What About Texas School Children?

Under the Perry/Craddick tax scheme, not a dime of new tax revenue would be available to improve Texas Schools. In fact, $1.8 billion dedicated to education by the same legislature last year has been rescinded. So, even if the modest education funding now being considered is approved, there would be a net reduction of $350 million in funds available for Texas schools.

Funds Dedicated to Education in 2005, HB1, Rider 97$1.8 billion
Funds Rescinded from Education 2006 by HB1 elimination of Rider 97$1.8 billion
Funds Dedicated to Education in 2006$1.45 billion*
Potential Net Loss to Texas Schools$ 350 Million

*under proposed HB1 legislation pending in the Senate

(Sources, HB1 Rider 97, 79th Legislature First Called Session and LBB Fiscal Estimate for Proposed Senate Version of HB1, 79th Legislature, 3rd Called Session)

What About Texas Teachers?

Even if the proposed teacher pay provisions are enacted, teacher pay in Texas would still rank in the bottom half among all states, behind even poorer and smaller southern states like Virginia and Georgia. (Source: Texas Comptroller of Public Accounts-Special Report, The Cost of Underpaying Texas Teachers, March 2006). In fact, Texas teachers would still be paid $4,000 less than the national average, further behind than they were six years ago. (Source: National Education Assn. Statistical Ranking of the States)

Conservative Dallas Morning News columnist Bill McKenzie had the guts to expose the Republican contempt for those who promote school investment when he wrote, “Maybe that’s why some in Austin, mostly House Republicans, came to refer to the coalition members (school leaders promoting public education funding) as ‘Whiny Ass School People’.” (Source: Dallas Morning News, November 23, 2005)

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