It was like somebody let out a big belch in church, you know, a stir went through the audience. The San Antonio ExpressNews editorialized right away that “Hey, maybe he’s trying to tell us something. Maybe we ought to talk about it.” And Bullock right away writes a letter to the editor saying “No, I didn’t mean that. I’m not recommending an income tax.” Which I’m sure he wasn’t. But that’s my point. What state leader has ever bothered to explain how people are paying more now under the sales tax, this differential that Norm mentioned, lower-income people paying a higher proportion of their income in taxes than the people of greater means. To me the obscenity in Texas is that we’ve got this [sizeable] wealth that is being untouched by taxation, both in the sense of corporations and in the sense of individuals. And I think we ought to address ourselves to that. As an example, if we had a one percent corporate income tax. . . . If we did start modestly like that, I agree with whoever said that, sure, it would grow, it would grow just like all taxes do. But for the first time we would have a tax in Texas that was based on the ability to pay, and not the ability to avoid paying. Glickman: You take what some people call the super-rich, the richest one percent of the population. They’re paying about 1.5 percent of their income to all taxes in the state of Texas. State and local. The poorest 20 percent, on the other hand, are paying 6.9 percent. So it’s more than four times as high a rate. But in response to what Stan Schlueter has been laying out, the middle-income, the middle 20 percent of the income distribution is paying about 3.6 percent of its income to state and local taxes, particularly state taxes, really. So that with a system that is based largely on the sales tax, on the state level and other consumption-related taxes, it simply isn’t true that the middle class makes out very well by paying more than twice the rate of rich people and there’s nothing in the cards that says an income tax system needs to be structured so that middle income people get screwed. And although I’m quite certain that the legislature is capable of putting together that system, there is no reason why it has to do that. If you look around the country, the states that have broadbased taxes have more equitable distribution of tax burden. And it isn’t hurting their growth. You know, Tax-achusetts is growing pretty well, the state of California, other states that have much higher tax levels than we do are doing all right. So I think that Mr. Schlueter is protesting too much on a lot of this stuff. Simpson: Well maybe they’re all protesting too much, but I think they’ve read, they’re reading political tea leaves and not distributional tea leaves, and the political tea leaves are telling them the people of Texas are not ready. But I find a significant shift in the fact that the lady protesteth too much. I’ve never heard people add “this session” onto the back of “there will never be any income taxes.” We are in the initial debate of income taxes in that legislature right now and Schlueter and all the rest of them are going to house it a certain way. And Bill Clements has made this a partisan legislature. The most conservative rural legislators are coming in and beginning to see that their communities cannot survive without law enforcement, law enforcement people or whoever [in] state services will not work for less than this any longer, they can’t deliver their services any longer, you know. There’s a wave of recognition that has swept We’ve already had a major tax revolt in San Antonio. Harris County and Tarrant County are looking pretty volatile right now. through that legislature that has not swept through the governor’s office yet. It has not swept through the population yet. I mean the governor ran on a platform that was appealing to the public; it was not an edifying platform; he did not try to edify the public. He exploited that feeling out there, and you can see this in the confusion of the statements that are coming from the governor’s office at this moment. They are in a trap, they are in a trap unfortunately that traps every Texan with it, as far as what kind of quality of life they’re going to lead. You go to a major city right now and you look at what we’ve had to do to property taxes in every major city in this state. And we’ve already had a major tax revolt in San Antonio. Tarrant County is looking pretty volatile right now. Harris County is looking pretty volatile right now. Those property taxes, local property taxes, are residential and so if we don’t deal with this, if we don’t give those cities some way to come up with something besides that sales tax then they’re going to have to go back to property taxes, they’re going to have to cut back services. It’s going to have to be one or the other. So, we’re begging a reactionary revolt, defined by reactionary elements, that in the end doesn’t aid conservatism or anything else. And I think people in the legislature are beginning to get that sense. Right now. And if they’re from West Texas, or any oil producing county, they really understand it. They’re going to see some school districts in bankruptcy in the next year, year and a half. And so, relying on that sales tax and that form of income is no longer gonna cut it for lOcal government. It’s just not going to work any longer. Moore: Let me say that the only thing that we’ve talked about so far that would aid local governments is the broadening of the sales tax base and leaving them at their same rate. We talk about a state income tax, corporate or personal, and I haven’t heard any dollars that this much can go to the state and this much to the local government. The way I see it is that the only effective approach this session is broadening the sales tax. And that’s because it’s the only thing that’s going to help local government. Plus, the clock is running and what really has to be dealt with is the doomsday scenario, is shutting down the state’s doors, this year, deciding which checks you can pay and which checks you can’t pay. Glickman: I guess I’m not so sanguine that all this has hit the legislature very much. We had Lt. Gov. Hobby up at the LBJ School about two weeks ago and he gave a little talk and the students asked some questions. And several students said, well what about an income tax? And he’s a guy who’s said we’ll have one at least in this century. He reversed himself. He said, we don’t want to make the same mistake the federal government made in 1914. I found that real depressing. Because I have reasonably high regard for Lt. Gov. Hobby. He’s a smart guy, and to take that position is really to turn to the clock back at least 70 years. Observer: Well there is a cynicism across this state, which is understandable, that if the legislature gets their hands on an income tax, they’re not going to structure it so that. it takes the money from the wealthier sectors. Dee, you understand the legislature; what kind of income tax could they be expected to produce? Simpson: Well, we’re talking in the future, and we’re talking about a way to do that. I’ve heard one novel approach to doing that and it was something that those of us who would like to see THE TEXAS OBSERVER 13 :1″-40.4.. 144, verrio0., ,, o-rw , R
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