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rf 7 / 1 _ The Texas Observer July 12, 1968 A Journal of Free Voices A Window to The South 25c Up Goes the Sales Tax Austin The Texas legislature, meeting to appropriate $2.6 billion in state funds and to pass taxes for 1969, upheld its reputation as a conservative body by placing the bulk of its tax bill directly on the consumer. Both the state sales tax and the motor vehicle tax were raised from two to three percent. At the insistence of the senate, the corporate franchise tax was raised from $2.25 to $2.75 per $1,000 of capitalization. The franchise tax is expected to bring in approximately $15 million of the bill’s $169 million in revenue. The senate, which proved itself to be the more liberal of the two bodies, also proved to be dry. It killed both liquorby-the-drink and liquor reform legislation. The traditionally placid senate demonstrated an astounding and sometimes confusing independence. As one senator commented, “We’ve got 31 groups with 31 floor leaders.” The ten or so liberals, aligned with the two Republicans and changing handful of moderates, came close to deadlocking the specially-called 30-day session. House deliberation on the tax bill went smoothly enough. The revenue and taxation committee spent three hours listening to testimony on the governor’s recom mended tax package, the main provisions of which would haye expanded the state sales tax by taxing specific services such as barbering and laundering, done away with the one percent city sales tax, and increased the sales tax to three percent with a rebate to the cities. After the governor’s bill was passed out of committee, Rep. Ben Atwell of Dallas, chairman of the tax committee, and Rep. Dick Cory of Victoria promptly substituted their own bill for the governor’s proposal. The Atwell-Cory bill left the city sales tax at one percent and raised the state sales tax to three percent, thus bringing the total sales tax in most Texas cities to four percent. Rep. Carl Parker of Port Arthur attempted to substitute a ten percent tax on corporate income in place of the sales tax. .”You’re going to say this will be passed on to the consumer eventually, but let’s try it this way for a change instead of passing it directly from the legislature to the consumer,” Parker argued. “I don’t think Texas is ready for this kind of tax,” Cory answered. The Parker amendment failed 109 to 38. Rep. Don Gladden of Fort Worth proposed a four percent tax on net taxable income, both personal and corporate, with a $400 personal exemption. Gladden said the break even point on his bill was $10,000. Thus, a family with a $10,000 income would pay $28 under the sales tax and also under the income tax. Families with incomes of less than $10,000 would pay less under the income tax plan than they would under the sales tax. “Business doesn’t want it and labor doesn’t want it,” Cory said. Gladden answered, “We talk about wanting to take care of the poor. If we are going to tax the consumers, we ought to do it on their ability to pay.” His amendment was tabled by the overwhelming vote of 129 to 13. One representative reminded him that a few years ago a legislator had received only one vote, his own, on an income tax amendment. “You did thirteen times better,” the legislator said, consolingly. The House adopted 80 to 63 an amendment by Temple Dickson of Sweetwater putting trading stamps under the state escheat law, Under the amendment, revenue from stamps not redeemed In seven years would go to the state. The measure was later removed by a senate committee. The final house vote on the AtwellCory measure, including a three percent sales tax and motor vehicle tax was 90 to 54. Deliberation took only four hours. While house sponsors slipped past opposition to the sales tax with ease, the senate spent two long emotional days proposing, amending, defeating and reviving a variety of tax programs. Liberals had put the senate on notice that they would not accept a tax package that touched only the consumers. They wanted to tax the business community as well. In committee, senate liberal leader A. aged to add a $12.5 million levy on natural gas production by a vote of nine to seven. The senate committee also moved the effective date on the sales tax from January, 1969, to October, 1968, in order to bring in additional revenue. When the measure reached the senate floor, Schwartz’ amendment to raise the natural gas tax from seven to eight percent was the first to be discussed. He explained that the tax had not been increased since 1945, except for 18 months in 1954 -55 when the rate was raised to nine percent temporarily. “A raise from seven to eight percent is not enough, but it is all we can expect from this legislature,” he said. “The natural gas income from taxes last year was $78 million