AUSTIN – The Texas Public Policy Foundation and its allies in the Conservative Texas Budget Coalition issued to the Texas Senate the following letter on the Senate Finance Committee tax relief package:
The Conservative Texas Budget Coalition appreciates the strides you are taking to provide substantial tax relief. While there is more work to do and we may not agree with every detail of this relief, we are encouraged to see leadership focused on more money staying in the pockets of Texans while funding essential government programs.
We urge you to stay the course toward a tax relief amount not less than that approved last week by the Senate Finance Committee.
Though there are multiple paths to provide tax relief, and we applaud the efforts of considering different taxes to cut, there is abundant research showing that the business margin tax costs Texans the most in terms of lower incomes and fewer jobs. For the sake of Texans’ opportunity to prosper today and in the future, particularly the working poor, this is the moment in the state’s history to put the margin tax on a path to elimination.
The margin tax is complex and unfair because it can force a business to owe taxes, even if it didn’t make a profit. From the recent Texas Public Policy Foundation report Economic Effects of Eliminating Texas’ Business Margin Tax, repealing the margin tax would:
- Increase personal income by about $11 billion after the first year and $16 billion within five years, translating into $2,400 more in the hands of Texas families of four;
- Create almost 68,000 new net private sector jobs after one year and 130,000 five years later; and
- Make Texas one of only four states without a personal income tax or business tax.
- These findings show that by leaving money in the productive private sector and eliminating the huge compliance costs associated with the margin tax the Texas economy will soar. According to the Tax Foundation, repealing the margin tax could improve Texas’ ranking in its State Business Tax Climate Index from 10th to third-best in the country.
We agree with Governor Greg Abbott who said that cutting taxes “is the best economic development program” the Texas Legislature could undertake this year. Given the heavy lifting that Texans have done to keep the national economy afloat since the Great Recession, the best way for the Legislature to show its gratitude would be through meaningful, lasting tax relief.
The Honorable Talmadge Heflin – Director, Center for Fiscal Policy, Texas Public Policy Foundation
JoAnn Fleming – Director, Grassroots America-We The People; Chair, Tea Party Caucus Legislative Advisory Committee; Chair, Lieutenant Governor Grassroots Advisory Board
Michael Quinn Sullivan – President, Texans for Fiscal Responsibility
Will Newton – Director, National Federation of Independent Business-Texas
Jerome Greener – Acting Director, Americans for Prosperity-Texas
Gil Robinson – Texas Director, Our America Initiative
Cathie Adams – President, Texas Eagle Forum
Tom Giovanetti – President, Institute for Policy Innovation
Jenna White – Executive Director, Young Conservatives of Texas
Richard Ford – President, Heritage Alliance
Josiah Neeley – Texas Director, R Street Institute
Patrick Gleason – Director of State Affairs, Americans for Tax Reform
Bob Williams – President, State Budget Solutions
Brandon Arnold – Executive Vice President, National Taxpayers Union
The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation.
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.