Half-Truths and a Rotten Tax Deal
By Mike Collier
There’s more to corruption in Texas than politcians who act like two-bit hustlers and illegally pad their bank accountants. A more insidious form of corruption runs rampant throughout Texas, and it takes the form of political leaders using spin and half-truths to cover their tracks while they hand ordinary Texans a rotten deal.
Case in point:
The 84th Legislature convened in January of this year believing it had more money than it needed. It had to decide which group of tax payers would receive a tax break. The legislature had several options, of which three were seriously considered. One, they considered reducing the sales tax (something every Texan and every Texas business has to pay). Two, they considered reducing residential property taxes (something every Texas homeowner has to pay). Three, they considered reducing the business franchise tax (something only large companies have to pay).
It won’t surprise anyone who follows Texas politics that big companies came first. While the legislature gave homeowners a tiny, temporary property tax break (worth about $10/month for the average homeowner), that was just a head fake. Republicans in the legislature gave the biggest tax breaks to the biggest companies by reducing the business franchise tax. As for a sales tax break which would have put money in every Texan’s pocket? Republicans in the legislature said forget it.
The saddest part is that many of biggest winners in the Texas tax-cut sweepstakes don’t live in Texas. Fewer than half of the top 50 business franchise taxpayers in Texas happen to be Texas companies. Companies like Apple Computers, Cisco Systems, Anheuser Busch, General Motors, General Electric, Nestle, Microsoft, Xerox, and Siemens were among the biggest winners and they aren’t headquartered here. Even investors of the Texas companies on the top 50 list, companies like ExxonMobil and AT&T, are owned extensively by investors living outside of Texas.
Anyone who knows finance understands that the largest companies doing business in Texas are owned by investors who live all over the world. So when it came time to decide who would enjoy the tax cuts, the Republicans in the legislature refused to give preference to taxpayers who live and work right here in Texas. Governor Abbott demanded (and Lt Governor Dan Patrick happily delivered) tax relief for thousands (if not millions) of corporate investors who don’t.
Imagine driving up our debt, which is what Republican politicians in Texas have been doing for years, while giving preferential tax breaks to investors who don’t live here? Abbott’s business franchise tax cuts will put money in the pockets of investors in California, New York, Ohio, Massachusetts, and every place you can imagine. Is he going to demand that these investors step up and pay-off Texas’ enormous debt when it comes due?
And what about thousands of small business in Texas who pay the sales tax but who don’t pay the business franchise tax? Since businesses making less than $1 million per year don’t have to pay the franchise tax, thanks to Republican politicians they got exactly $0 tax relief.
Republican politicians in Austin choose to defend this unfair policy the way they have defended rotten deals in Austin for years. They say that the franchise tax cuts were needed to create jobs. This is a half-truth of the most sinister kind, because cutting the sales tax would have also created jobs. In fact cutting the sales tax might have created more jobs, because more of the money would have stayed right here in Texas.
And this is the essence of legal corruption in Texas politics today. Our political leaders, including our Governor who was first to demand the franchise tax cut, have been feeding Texans half-truths designed to cover their tracks for years while they do the dirty work of the big corporations that keep them in power. That’s why hard working Texas families are forced to watch helplessly as their taxes go up, while big-corporate investors watch gleefully as their taxes go down.
(This piece originally appeared in the Austin American Statesman on August 18, 2015)
To learn more about Mike Collier visit his website at: www.collierfortexas.com/