State lawmakers advance dueling tax cut plans

posted on 5.04.2015

- Bill locks in radio sales tax exemption

With fewer than 30 days left in the 2015 regular legislative session, the House and Senate have advanced dueling tax cut plans that range from $4.5 to $4.9 billion and save taxpayers at most about $200 monthly, but while the dollars are close, the chambers are far apart on how they cobbled together the savings.

About half of the tax cuts would come from the franchise tax, which the House would cut by 25 percent and the Senate would cut by 15 percent while increasing the taxable revenue exemption from $1 million to $4 million.

The other half of the tax cuts in the House plan would come from reducing the state sales tax for the first time since it was adopted in 1961, from 6.25 percent to 5.95 percent. This cut would be permanent and would benefit individuals and businesses alike.

The Senate plan, however, targets its other tax cuts to residential homeowners by increasing the homestead exemption to 25 percent of the median value of a Texas home. The state would at least temporarily replace the funding that would be lost to school districts. The savings would likely be temporary, as well, critics say, as it is gradually overtaken by rising property valuations and would benefit homeowners only, not renters and not businesses.

The state’s largest business taxpayers are firmly opposed to the Senate approach, arguing they will be saddled with paying a disproportionate share of ever-increasing property taxes.  Small business advocates prefer this approach because fewer of them would have to pay the franchise tax and because they typically own less valuable property than large businesses.

Governor Greg Abbott is on record advocating for cutting the franchise tax, which funds public schools, but hasn’t indicated a preference for either the House or Senate approach to cutting other taxes. The chambers are on a collision course absent major concessions, threatening the possibility of a special session to resolve the dispute and finalize the state’s next two-year budget.

House approves radio sales tax exemption

The House this week approved on first reading HB 2507, a measure advanced by TAB that would lock in a sales tax exemption for radio stations’ digital transmission equipment.

Authored by Rep. Kyle Kacal, R-College Station, the bill provides consistency to state tax policy under which similar equipment purchased by television stations already is clearly exempt from sales tax.  Sen. Kel Seliger, R-Amarillo, is carrying the bill in the Senate.

The House is slated to give final approval to the bill this week, with Senate approval required next.

Questions? Contact TAB President Oscar Rodriguez or all (512) 322-9944.         

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