2013 Lege Wrap-Up: Tax Giveaways

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Dick Lavine, Senior Fiscal Analyst at the Center for Public Policy Priorities

This session, the Legislature give higher priority to tax giveaways than to fully restoring public services to their pre-recession levels.  Three major tax giveaways, plus renewal and expansion of the state’s major school property tax abatement program, will hurt the state’s ability create the human and physical infrastructure needed to ensure a prosperous future for all Texans.

The three tax-break bills will reduce the amount available to support public services in the next state budget by $1.1 billion.

The largest (HB 500) reduces the tax rate paid by most businesses from 1 percent to 0.95 percent and exempts businesses with less than $1 million in gross receipts from paying any franchise tax, cutting state tax revenue by $715 million.  Another (HB 800) creates a new tax break for companies doing research and development, eliminating $240 million from potential support for the 2014-15 budget and $305 million from the 2016-17 budget.  The third (HB 1133) creates a new sales tax exemption for cable TV, Internet access, and telecommunications services at a cost of $100 million every two years.

The Legislature also (HB 3390) expanded the program of school property tax abatements, known as Chapter 313.  The abatements expected over the eight-year extension authorized by this bill will reduce property tax revenue received by school districts by over $4 billion.

Texas’ revenue system already lags behind economic growth, which is why we are always short of what we need for investments in public services. These bills take the wrong approach to preparing for the future, shortchanging support for developing a skilled workforce and exempting the fastest growing sectors of the economy of the future.

At the Center for Public Policy Priorities, we believe in a Texas that offers everyone the chance to compete and succeed in life. We envision a Texas where everyone is healthy, well-educated, and financially secure. We want the best Texas - a proud state that sets the bar nationally by expanding opportunity for all. CPPP is an independent public policy organization that uses data and analysis to advocate for solutions that enable Texans of all backgrounds to reach their full potential. We dare Texas to be the best state for hard-working people and their families.

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