Bean’s plan will more than double the sales tax you pay
In comments written to the Dallas Morning News, House District 94 nominee Cheryl Bean proposes tax moves that would result in a massive increase in local sales taxes paid by Tarrant County families. Currently, a combined state and local sales tax of 8.25 percent is charged on most items purchased. If Cheryl Bean gets her way, the sales tax will more than double to an eye-popping 19.6 percent.
Bean’s Bad Ideas Will Raise Your Sales Tax
In discussing taxes, Bean gives her ideas on how to replace property taxes that fund public schools. She specifically lists using budget surplus funds and then, after the surplus is drained, turning to local sales taxes. While Bean suggests adjustments and offsets between the state sales tax and the local sales tax, the approach inevitably leads to replacing the revenue generated by property taxes with an increase in sales tax collections.
Here are the facts and the math:
- Property Tax Revenue: Property tax collections in Texas total approximately $81 billion per year. About half of that amount goes to local governments to fund schools and for other purposes.
- Budget Surplus: The State’s Rainy Day Fund sits at its cap, which is about $26 billion. The exact amount of other state surplus funds is unknown but may total as much as $10 billion.
- First Year Revenue Gap: Every dollar of the Rainy Day Fund plus another $10 billion in surplus funds totals $36 billion, which isn’t enough to cover even half of one year of lost property tax revenue. Another $45 billion would be needed to cover the shortfall in the first year alone.
- Sales Tax Increase Required: Going forward, with the budget surplus depleted, sales taxes are the only practical alternative to cover the entire $81 billion per year in lost revenue.
- Current Sales Tax Collections: The current sales tax paid in Tarrant County and most other parts of the state is 8.25 percent, which generates about $59 billion per year.
- Total Sales Collections Needed: To retain current sales tax revenue ($59B) and replace annual property tax revenue ($81B), the total amount of sales tax revenue needed increases to $140 billion.
- Sales Taxes Would more than Double to 19.6 percent: The sales tax rate would need to rise to 19.6 percent to generate an additional $81 billion annually – an increase of 11.3 percentage points from 8.25 percent.
8.25% X ($140B/$59B) = 19.6%
What does an increase in the sales tax from 8.25 percent to 19.6 percent look like in real dollars and cents?
The taxes paid on:
- A $75 Pair of Shoes goes from $6.18 to $14.70
- A $400 Lawn Mower goes from $33.00 to $78.40
- An $800 Set of Car Tires go from $66.00 to $156.80
- A $1,500 Refrigerator goes from $123.75 to $294.00
