BUSINESSMEN: THE ‘DEFICITS’ TAXES: THE IDEAL AND. THE REAL Because the subject is a swamp of statistics, variables, and variations, and because the absurdities, injustices, and inconsistencies of the present state tax system have been well publicized here \(“A. Study of Texas Taxes,” Obs. elsewhere, we shall limit our tax skeletal outline of where taxes into pure tax theory for Texas; nue until a sensible tax system becomes practical. Only eight other states levy lower per capita state taxes than Texas, according to the U. S. Bureau of Census report, “State Tax Collections in 1958.” The eight are Alabama, Kentucky, Missouri, Nebraska, New Hampshire, New Jersey, South Dakota, and Virginia. Of the $669 million paid to the state by Texas in 1958, $313 million, 47 percentalmost halfwas in the form of “sales and gross receipts taxes.” The rest of the state’s income came from sever$34 mil$11 milthe federal report said. The Ideal and the Real WE WOULD EMPHASIZE that the state tax pattern is already dominated by the direct taxes on consumers and therefore is sharply regressive. No more sales taxes general or “selective,” raises in college tuition or cutbacks in college student services like the University of Texas Health Serviceshould be countenanced. The personal income tax is the ultimate, and ultimately the only just, tax. It is subject to precise manipulatiOn to accomodate the social values which legislators wish to observe in the tax sys The project for constitutional revision undertaken by the Texas League of Women Voters is likely to evolve into a convention to write a new constitution. This we will favor when the leadership. in the statehouse is more likely to exert a more constructive influence on the composition and affairs of the convention. Meantime, what broad principles should we be discussing for the new constitution? No question more searchingly explores :one’s philosophy of life and government. The new constitution should embody the principle of checks and balances between the three branches of government, but each of the branches should be unequivocally, and more effectively, responsive to the majority decisions of the people in their elections. In this respect the new constitution should diverge fundamentally from the federal and the present state constitutions under which a variety of considerations are permitted to misrepresent or prevent the expression of what would be the decisions of the maj ority. Broadly, we agree with former Gov. Shivers, Atty. Gen. Wilson, government chairman 0. D. Weeks of the University of Texas, government professor Byron Abernethy of Lubbock, and others that the governor’s office must be vested with true authority over the executive branch. Except for one other official who should be elected, t h e elected governor should appoint all the heads of the state agencies; he should then compose his appointees into a cabinet over which he presides, so that he, and he always, is responsible and answerable to the tern: it can be collected easily under the withholding plan \(as be counted as a deduction from the federal income tax. The hostility toward the personal income tax is really the public’s dislike of any taxes, of which the income tax is the best known form; but when taxes are inevitable, as they are in the modern state with expanding state services, the people might as well relax and accept the tax which is fairest to them. We advocate, first, the repeal of all the regresive consumer taxes, the gasoline, beer, cigarette, playing cards, and other such taxes. Simultaneously we advocate that the state enact a progressive personal income tax, graduated to bear lightest on the lower brackets, heaviest on the higher brackets, to replace the foregone sales tax income and to finance needed new state services. An exemption of income below $5000 or so would be desirable if possible given revenue needs. The obvious difficulty this session is that most legislators pledged themselves against a personal income tax on the stump in the summer. We would suggest that the current legislature acquire most of its new income from sources which would justly supplement a personal ‘income tax to be enacted sutsequently, perhaps in 1961. Since the personal income tax misses those out-ofstate corporations which extract large sums of wealth from Texas without sharing in the support of our state services and fails to compensate the state adequately for the natural gas which is sent out-of-state, we advocate a combination of a corporate profits tax and a natural gas tax. Since natural resources companies also would be subject to the corporate profits tax, a formula might be worked out to permit the appli people for the conduct of the executive branch. The attorney general should also be elected: In a state in which the press is overwhelmingly conservative, there should be a possibility of creative competition within the official state leadership, because only such official dispute can attract the attention of the press necessary for public understanding of the public issues. Since the attorney general’s office has the, power to crusade for reforms and changes, his is the logical secondary office to leave elective. We favor a unicameral legislature of members \(preferably not resenting the people. The rela.: tively new governmental . invention for the automatic redistricting of all affected political divisions at the end of every federal census should be incorporated. There should be only one court of final appeal, instead of two for different kinds of cases, as now. The best suggestion of many we have heard for the selection of the Supreme Court is the election of not more than one member each two years, the terms to last until each member comes up for re-election. This would permit a measure of concentration of the public attention on the candidates for the bighest court but would not leave the court too much at the mercy of political demagoguery. Of course the many statutes now a part of the constitution should be transferred to the law hooks. There should be no substantive changes in these provisions incident to their transfer to the statutory status; on such side issues the new constitution might founder. cation of a percentage of natural resources taxes paid against corporate profits taxes due. At the outset of the session, the legislature will be attempting to find single-shot sources of income to fill up the $65 million deficit. One bonanza possibility will be the Hughes-Seeligson-Bell bill \(understood to have the Govto the state unclaimed bank balances. The bill this time includes oil and gas accounts and might yield, on the single shot, $50 or $60 million. The Zollie Steakley committee on immediate revenue possibilities , visualizes the prospect of increased tax collections with increased franchise tax returns under a new allocation formula for interstate business \($30 milland beer tax exemption on military bases \(which we vigorously for state departments’ services tralizing housekeeping services estimate for the unclaimed bank balances bill. Rep. George Hinson, Mineola, will introduce a natural gas tax on dedicated reserves, it is understood. Each penny per thousand cubic feet will raise more than $50 million a year. Daniel is expected to support a natural gas tax. Other Good Sources IN ADDITION to these programs, additional revenue might be raised by: Taxing high w a y billboards, especially of signs on the same subject in the same area; Requiring that intercollegiate athletics at the state institutions of higher learning be self-supporting \(but not intramural athletics, which are an essential part A graduated land tax to discourage the purchase of whole counties by oilmen with nothing better to do with their money; State operated liquor stores. The oil production tax is not likely to be increased this session, but if there is a case for an oil depletion allowance for oilmen, there is an even better case for a higher production tax based on the same allowance for the state. James P. Hart has offered these thoughts on the subject “He said in 50 or 60 years ‘our natural resources will be mostly depleted,’ and he proposed: ” ‘A tax on the production of oil Loan Sharks Need A New Cap in 1959 The Observer cannot share the Texas Legislative Council’s advocat o is’f asking the people to abol e, e ten percent interest cap in constitution before advising them what rate is proposed in the alternative. There is too much sentiment in the legislature already for a rate higher than 36 percent, which ought to be the uppermost limit. Were the ceiling abolished, the loan sharks would then fight any interest cap in the subsequent legislatures, so the shoWdown, inevitable anyway, might as well be precipitated this session. Of course we vigorously favor the licensing and regulating of the small lenders by the State Banking Commission. The legislature should instruct the legislative council now to inquire systematically into interest charges or auto sales and other kinds of installment buying, obviously areas in which there have been many practices difficult to describe as anything but gouging. and gas should be increased to create a Permanent Improvement Fund, something like the Permanent University Fund, to purchase bonds from various agencies designed to improve the state’s natural resources, other than gas and oil, such as water.’ ” The city of Baltimore has enacted a lucrative tax on advertisements and ad agencies on the theory that a lot of money was circulating to no particularly good purpose and ought to yield some tax income. A Texas legislator has had the idea of taxing newspaper ads larger than a certain size, or ads which do not carry the price of the merchandise advertised. This seems like an important area for new revenue, provided the courts consent. We recommend the legislature seek public adoption of a constitutional amendment authorizing them to re-allocate the gasoline sales tax so that more of it can be spent on schools and leSs of it on highways. The highway program is important, but schools are more important. The legislature should be in a position to effect this reallocation should the time arrive when it must do so or leave the schools inadequately financed. The ‘Seed Corn IT IS REGRETTABLE that the state auditor has lent his name to the “Cavness Plan,” for otherwise he would be remembered for his yeoman services for efficiency in government instead of his fostership of the raiding of the public schools’ endowment. Last session, rather than pass adequate taxes, the legislators deployed the Cavness plan for a one percent transfer of the permanent school fund to the payment of the states’ current expenses in running the schools. No doubt Rep. Dugas will try to renew this transfer this year. The state e du c a t ion authorities, the leaders of the state’s g r eat universities, the Governor, the Attorney General, have all, in varying degrees, decried this “eating of our seedcorn.” We have seen no better statement of the considerations than an editorial statement by the Fort Worth Star-Telegram, that “No one generation has a rightful claim to the body of the fund, though all are entitled to benefit from the earnings. It is playing fast and loose with a sacred trust to dissipate the fund, even in part.” PRESS: SAFEGUARDS Legislation should be enacted to legalize reporters’ refusal to reveal their sources of information to any public body or court, except for grand juries \(as Rep. de reporter will go to jail to protect a confidential source, but he should not have to, any more than a lawyer should be imprisoned for refusing to violate his profession’s ethics protecting the confidential lawyer-client relationship. A law should be passed prohibiting the administrations of statesupported colleges and universities from censoring student-written publications. There is hardly an outspoken student newspaper left in Texas under the systerri of state tolerance of college administrations protecting themselves or their views from student criticism. The publication of state legals in a weekly newspaper in each county should be abolished and replaced by the publication of a few thousand copies of each announcement which would be available on. citizen request. Former Secretary of State Tom Reavley admitted what everybody knows, that politics often guides the placement of such ads \(Obs. less expense to the state. All groups fall into stylized poses, loose dogmas, bugaboo stereotypes, and the bugaboo of Texos business is “taxes” or its obverse, “state spending.” The best aimed logical torpedo launched toward this thinking in some time scored broadside in “The Texas Businessman, The Weekly Advisory for Texas Business” for Sept. 1, 19.98. We excerpt from the advisory’s advice to businessmen: “To understand the Texas year big deficits. Deficits in public finances, state and city, are known, established.Deficits in education, public schools, and in higher learning. Deficits in highways, airfields, urban land use, office space. Deficits in hospitals, prisons, youth correctional facilities. Deficits in public and private administrative practice. Deficits in water resource development, and agriculture advancement. “Texas has arrived at the moment when it must set about to overcome and correct many shortages, catch up with itself, expand, push forward. Texas, at the state level, must do some ‘keeping up with the Jones.’ For the first time, Texas has need to undertake deliberately to make its public facilities, programs, standards, etc., the equal of other states. To do less would be to risk a blight, stagnation on Texas growth. “The meaning? The era of ‘cheap’ Texas is at an endthis year. Costs are going up, steeply,
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