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July 09, 2005

New School Finance Plan: Tax Breaks Only for The Wealthiest Texans

That's what the latest change to the tax plan by the Texas Legislature has in store for us:

Comparisons of House legislation that has cleared that chamber and Senate legislation scheduled for debate Sunday.

Sales tax

House: Raises state sales tax from 6.25 percent to 7.25 percent, expands it to car repairs, bottled water and computer programming.

Senate: Raises sales tax to 6.75 percent; expands it to some computer repairs; grants sales tax rebates to low-income Texans who use Lone Star Cards to buy food.

'Sin taxes'

House: Raises cigarette taxes $1 per pack. Senate: Raises cigarette taxes $1 per pack over several years; raises some alcohol taxes paid by businesses.

Business taxes

(This is the part of the bills Gov. Goodhair Perry is against.)

House: Forces about 10,000 more companies to pay franchise tax.

Senate: Forces about 10,000 more companies to pay corporate franchise tax. With voter approval, also lowers tax rate but requires that it cover at least 10 percent of a company's payroll.

School property taxes(for maintenance and operations)

House: Cuts maximum rate from $1.50 per $100 in assessed value to $1.23 this fall and $1.12 next year.

Senate: Cuts maximum rate to $1.30 this fall. With voter approval, drops to $1.11 next year.

What it means to you

How the tax proposals would affect the cost of various items

Widescreen plasma TV(List price of $2,999.99)

Now: $3,187.49(includes 6.25% state sales tax) Proposed: $3,202.49 under Senate plan (with 6.75% state sales tax); $3,217.49 under House plan (with 7.25% state sales tax)

Pack of cigarettes

Now: $4 (includes 41-cent tax)

Proposed: $5 (with $1.41 tax)

School property tax bill*

(For home assessed at $200,000)

Now: $2,775

Proposed: $2,053.50 under Senate plan; $2,072 under House plan

*In districts that tax at maximum rate for maintenance and operations

Tax breaks for a few

The House plan will result in lower tax bills for only the highest-earning 20 percent of Texans, according an analysis by the Legislative Budget Board. No similar analysis has been done for the Senate proposal.

Family income range Change in total tax bill

Up to $13,415 4.36%

$13,415 to $22,833 3.74%

$22,833 to $31,735 3.84%

$31,735 to $41,463 3.65%

$41,463 to $51,750 3.42%

$51,750 to $64,325 2.98%

$64,325 to $79,271 2.11%

$79,271 to $100,593 1.32%

$100,593 to $140,853 -0.44%

More than $140,853 -2.38%

If the House version endorsed by Perry and Texas business lobbyists passes, Texas will have one of the highest sales tax rates in the nation.

Posted by timothompson at July 9, 2005 03:30 PM