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May 10, 2005

This Headline Cannot Contain My Boiling Rage

By Jim Dallas

Front page, H-Chron, today:

Despite offering limited tax relief for some of the poorest people, a Senate tax overhaul would raise taxes for most Texans, at least initially, legislative analysts reported Monday.

Only households with incomes of more than $140,853 a year would realize a net tax cut — an average of 1.52 percent — under the swap of higher state taxes for lower school property taxes in fiscal year 2007, when the trade-off is fully in place.

A tax bill approved earlier by the House also is weighted in favor of the wealthiest Texans, although the two plans differ significantly in details...

All other income categories would get a net tax increase. Overall, that would mean a tax increase for 80 percent of Texas families, said the Center for Public Policy Priorities, which advocates for middle- and low-income people.

Sen. Steve Ogden (R-Bryan) tries to spin this as the result of cigarette taxes; apparently working families spend more of their income on ciggies than the wealthy. That's probably true - a pack-a-day habit is a pack-a-day habit, regardless of whether you're making $20,000 a year or $200,000.

Of course, sin taxes, like all consumption taxes, tend to be regressive in this way (you know, because a three-meal-a-day habit is a three-meal-a-day habit regardless of income). Moreover, sin taxes tend to fall on those pesky things that the powerful folks in the Lege simply don't approve of. Did the bill drafters sincerely believe that cutting slightly regressive property taxes and shifting the burden to highly regressive consumption taxes would not have this sort of distributional impact?

Granted, this effect is ameliorated ever-so-slightly by the new business tax (although the bottom line, as noted above, is still negative for four out of five Texans), and the Senate bill is better than the House bill. But it enrages me greatly that the Lege will use smoke-and-mirrors legislation to dress up a tax hike for working families while refusing to hold a simple up-or-down vote on an income tax bill which would be a real tax cut for most Texans.

Update: The always calm, cool, and collected (mostly cool) Kuff has his thoughts here.

Posted by Jim Dallas at May 10, 2005 04:39 PM | TrackBack


A quick look at the CPPP paper shows at least one critical flaw - they assume sales taxes won't be deductible after 2005. It's pretty misleading to assume that this tax cut won't be extended. Yes, the poor don't itemize, but the sales tax deduction lets many of the middle class reach the itemization threshold. And nearly every homeowner can itemize already.

Bottom line is if you own a home, you're almost certainly getting a tax cut. And if you don't smoke, even better for you. I thought dems liked cigarette taxes?

Posted by: WG at May 10, 2005 09:15 PM

How many Democrats have filed an income tax bill/resolution or signed on to one?

Posted by: snrub at May 10, 2005 09:46 PM

Snrub: Eddie Rodriguez has filed a bill now two sessions in a row.

WG: Will it be? And does anyone keep the necessary receipts?

Posted by: Jim D at May 11, 2005 12:12 AM

Don't need receipts, there is a default amount, to which you can add large purchases like cars, boats, etc.

And I'd say the odds of it not being extended are right around the odds of the Bush tax cuts not being extended, maybe 10%.

Posted by: WG at May 11, 2005 09:18 AM

I am a homeowner, I am no where near the cut off to be able to itemize. Even if the sales-tax deduction is extended, I will be paying more taxes than now, does this mean I am currently making very little money, since I obviously don't pay enough in interest on my mortgage to itemize? Yes!
This illustrates how the least wealthy will be paying the highest price for this tax redistribution.

Posted by: comeon at May 11, 2005 01:16 PM

So one left wing nut in the House has filed an income tax resolution with no co-authors that I can see. Why aren't the D's pushing this harder? I'd really love to see them all run on this platform.

Posted by: snrub at May 11, 2005 03:07 PM

Although I am generally in favor of a progressive tax system and would rather not see this change that adversely affects the middle class, these are the people who sent Bush to the white house and elected all these right-wingers in the state and federal legislatures, just as is described by the book, "What's the Matter with Kansas". Until these people wake-up and realize that "rampant lesbianism" in the high schools and gay unions are subterfuge for building a tax system that shifts the burden from the corporations and the wealthy to the middle class and poor, there is nothing that can be done. This is why I think its gonna take a fairly large financial meltdown to provide a slap in the face large enough for these people to snap out of the Jedi mind tricks that have been played on them. Their taxes keep going up, but as long as those politicians keep telling them that they voted for a "tax cut" and a ban on gay marriage , the voters keep electing them. Nevermind that the "tax cut" was for the top 1%. The politicians justify that away and convince these people that the top 1% will have more money to create new businesses that create new jobs for them. Nevermind that the new jobs will be for wages that are still taxed at the higher level. The montra of the right's relentless propaganda effort to convince people that they are good for the ecomony is very strong. Just look at the current economy: largest national debt in history (doubled since Bush took office), no spending cuts (Bush has yet to veto a spending bill), real wages are falling, inflation is higher than its been in years, the trade deficit is enormous, interest rates are starting to rise, personal savings is down, employment is stagnant at best, consumer confidence is down, and on and on. If people don't understand that these conservative "borrow and spend" policies do not do what the R' say they do, then they deserve what they get. All I can do is prepare for the bumpy ride ahead.


Posted by: dude at May 12, 2005 12:23 PM

I'm sorry dude,
but to whom do you refer as "these people". I am one of the people who will be adversly affected by this tax, and I certainly did not vote for these legislatures.
It's a pretty goddamned presumptuous statement you are making. Particulary when you consider the high level of dissenfranchisement among poor voters.
For the most part, these people where put in office by the people who will actually benefit from regressive taxes. They are the people most likely to actually vote, saying that the poor deserve regressivee taxes as a penalty for their lack of or inabillity to participate fully in the political system is ill-informed at best, mean spirtited at worst.
That said, I agree things are likely to get a lot worse before they get better, it may take a hammer over the head to get people to recognize the importance of participation.

Posted by: comeon at May 12, 2005 02:37 PM

comeon, the cutoff when a homeowner should itemize is when their interest + property taxes + sales tax deduction + charitable giving is greater than the standard deduction. For a single homeowner, a house worth more than about $45K would qualify. For a married couple, a ~$90K house would, less if they give much to charity. I'd bet this would cover the vast majority of homeowners.

BTW dude, the Bush tax cuts actually made the tax system more progressive, not less. See http://www.slate.com/id/2108201

Posted by: WG at May 13, 2005 10:47 AM

I know exactally how to itemize deductions thank you very much, and all these things combined for me did not exceed the standard deduction. And you are right, the assessed value of my home is not much more than you say. Again making my point, those with the least amount of money will pay the highest price for this bill.

Posted by: comeon at May 13, 2005 02:59 PM

Oh yes WG,
and I would love to be able to give enough to charity to bump my itemized deduction up over that of the standard, unfortunatly I have to use that money to pay my taxes.

Posted by: comeon at May 13, 2005 03:02 PM
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