Day: May 26, 2015

Heard the bad joke about tax cuts?

 

Educators can appreciate tax cuts as much as anyone else, but they also know when they are being taken for a ride. The “tax relief” emerging from this legislative session will give a substantial break to many businesses, while barely affecting most other Texans.

Don’t be fooled by the reported $3.8 billion worth of the total tax reduction package, the total chunk it takes out of the state budget. That’s combining everybody’s share. What the tax cut will be worth to each individual is what matters to most individuals, and the joke will be on the average tea partier out there – and almost everyone else.

If voters approve a constitutional amendment in November, the standard homestead exemption on property taxes will be increased from $15,000 to $25,000. That means the average homeowner will receive a tax cut of about $125 a year, or about $10 and pocket change a month.

You can spend that on a big bucket of popcorn at the movies every month. But not much else.

To be sure, increasing the homestead exemption is the best way to reduce property taxes fairly, but property tax cuts are only one part of the tax-reduction package. The primary beneficiaries of the entire package will be businesses, not individuals. Business owners will see a real reduction — 25 percent — in their franchise tax rate, not just a few dollars a month. These are some of the same people who allegedly value the contributions of public schools and wring their hands over student test scores but nevertheless put a higher priority on lower taxes than they do on adequate education funding.

The Legislature is increasing public school funding by $1.5 billion over enrollment growth for the next two years. That is a step in the right direction, but it still leaves education funding in Texas – which spends less than most states per student — with a long way to go. And now, going forward, the tax cuts mean we will have less revenue to spend on schools and other public needs.