Center for Public Policy Priorities Criticizes Property-for-Sales Tax Plan
The CPPP article by Dick Lavine can be found here.
Here is an excerpt from the introduction:
Recently, some have proposed that Texas replace local school property taxes by increasing the rate of the state sales tax or expanding the sales tax to more goods and services. Such a tax swap would be a bad deal for businesses, families, and public education. 1) The swap would make Texas businesses less competitive because the higher sales tax would raise the cost of Texas goods and services. 2) Taxes on most Texas families–including middle-class families–would actually go up. Only the wealthiest families would see a tax reduction. 3) At the same time, public education would be hurt. Schools would have one source of revenue, sales, which is less stable than property. With the state paying all the bills, more decisions would be made in Austin, and the link between local taxpayers and public schools would be broken. In addition, local communities could no longer supplement the basic education provided by the state.
My post of December 7, “Conservative Rs seek to zero out school property taxes,” dealt with items 1) and 2). Lavine’s third point is crucial. He writes that the combination of property and sales taxes buffers the state from economic downturns. He describes revenue collections from sales taxes as “volatile,” pointing out that that the economic slump in 02-03 led to severe cutbacks in state services. The property tax, his report says, is much more stable.
In addition, the CPPP report makes the point that doing away with property taxes severs the link between the community and its public schools. Currently, a community can vote to raise its property taxes to improve its public schools. If the funding is centralized, the report points out, the opportunity for local decision-making would be cut off, and all schools would receive the same amount of state aid per pupil. Local voters could no longer add to this basic level.
As I said in my original post, this scheme, announced by Phil King, was not designed to help the schools. It was designed to hurt the schools. They would have no recourse to revenue except what Perry, Craddick, and Dewhurst were willing to give them. The purpose of this scheme is to starve the schools and give them only what Perry, Craddick, and Dewhurst would allow. Lavine was too politic to say this in so many words, but the point is unmistakable.