ustxtxb_obs_1987_03_20_50_00008-00000_000.pdf

spending. “The federal government passes it on to the states, the state passes it on to the county, and that’s where the buck stops,” he said. Still, he would be against a state income tax, if it’s anything like the federal one. “It’s a hassle. I know they have to have it. But they got it so you have to spend as much having it figured as you pay in taxes.” At a flea market west of town there was more sentiment for using sales taxes to solve the state’s problems. A woman visiting from the West Texas town of Colorado City said, “I think they ought to put a tax on everything, and not have `this is taxable, and that’s not,’ you know, and all this kind of crud.” Another woman added: “They should put the whole durn thing on sales tax and forget the property tax we’re payin’. We’d be payin’ equal.” The woman from Colorado City said an income tax would hurt the economy. “In the first place, a lot of people move to Texas because there’s no state income tax. You take military retirees. They’ll come to Texas because we don’t have a state income tax.” In the long run, she thinks the oil industry will rebound and the state’s problems will ease. AND SO IT went. Any state survey will show most people dead set against an income tax. This is the point that Gov. Clements continually gets stuck on, as did Gov. White before him. And yet, what lies behind the popular resistance to an income tax _? In Peoria, at least, the simmering class resentment was just one simple question beyond “Are you for or against an income tax?” It is difficult for people to imagine a state income tax structured to collect from those most able to pay. How, they wonder, would such a thing possibly come about? To ask about a tax directed at those above $100,000 a year is to ask a foolish question. With the lines between the middle class and the poor increasingly blurred, especially in rural counties such as Hill County, the traditional battle between property tax payers and pro-government-spending forces does not promise to be constructive. What many people seem to agree on, however, is that the wealthiest people in Texas do not carry their load. Even Fred Kevetter, the county judge candidate who talks of promoting the Association of Concerned Taxpayers, says “We’re not taxing these people that are loaded with CD’s and bonds. The favored few are exempt.” He is one of the few who told me he was not against an income tax. “I have no problem with it personally,” he said. “If you don’t make it, you don’t have to pay it.” Would tax reform play in Peoria? Not if it is the kind of “reform” trumpeted by the federal government, in which the average taxpayer was hard pressed to detect a lightening of the load. Not if it requires exasperating paperwork. Not if it doesn’t shift the burden away from those who are struggling to make it. Not if it isn’t fair. The citizens of Peoria are not holding their breath. Washington, D.C. TEXAS HAS probably the most inadequate and inequitable tax system in the nation. Most states balance out the regressive character of the sales tax with a personal income tax which is tied to the federal income tax computation, so that its administration is relatively simple. But one who even mentions a personal income tax on the floor of the Texas legislature is shunned as if he or she has a communicable disease. In 1961, when I was in the legislature and the sales tax was about to be passed, I offered an amendment called the “Regressivity Correction Factor,” which was in fact a very mild form of income tax just to make the omnibus tax bill of that year which included the sales tax come out with a proportional tax result neither regressive nor progressive. Of course it didn’t pass. It wasn’t calculated to. It was offered to at least demonstrate how the Former Congressman Bob Eckhardt, Democrat from Houston, served in the House of Representatives from 1966 through 1980. He was a member of the state legislature from 1959 through 1965. poor were paying a higher percentage of their earnings than the rich under the sales tax scheme and, as well, to add a little baggage to the sales tax bill in the hope of preventing it from passing. In an election campaign several sessions later, this was used against me. My opponent, armed with old House journals and a stack of records, appeared on television and said that I had committed the awful offense of offering an income tax bill. I answered truthfully but, I confess, in a Reaganesque way: misleading but not literally false. I said I had never offered a bill calculated to get a personal income tax into the laws of Texas. I hadn ‘t calculated to do that. I knew it was impossible. I calculated to defeat or at least expose the regressive nature of the sales tax. Later my opponent, Art Forbes, really a nice guy, came to me and said: “We spent a lot of money to get your record researched way back and got all the evidence and the props and the expensive. TV time and you just stood there and said you hadn’t gone to pass an income tax, and they all believed you.” So, you see, I can understand politicians’ trepidation about a state personal income tax. But the poor man in D.C. puts a greater percent of his income in “Lotto” than he ever would have to pay under such an income tax as might be passed in Texas. Though the Texas sales tax is the ninth highest in the nation, it is one of the least regressive because it does not tax food, and that is the single issue the liberals won in 1961. Comptroller Bob Bullock would make it somewhat less regressive still, by lowering the rate \(from 5.25 percent to 4.5 percent after ing the base by including services. But, since the inclusion of services brings in more than the reduction of the rate, the sales tax would increase by $1.88 billion. The most antiquated and creaky thing in our Texas tax machinery is the corporate franchise tax. We have done a remarkable disservice to small businesses with receipts coming entirely from activities in Texas: we discriminate against them through the formula for allocating the corporate tax base \(capital receipts in Texas to total receipts. The tax is awkward and inequitable in two ways. First, it does not measure the bigness, the ability to pay, and the advantages that the corporation gets from its location in Texas. A railroad pays heavily because of its large financial base, but a high tech laboratory or certain service institutions with much lower capital but much higher earning comes off lightly. Such is not true of a corporate income tax where the real Time to Tax Corporate Income By Bob Eckhardt 8 MARCH 20, 1987