The Great Texas Tax Shift of 2007
July 26, 2007
Now comes the Great Texas Tax Shift of 2007. On June 15, Rick Perry cut over $153 million of funding from Texas's community colleges. In his written veto message, Perry accused college presidents of “falsifying their appropriations requests.” “How do you accuse 50 community colleges of falsifying a report?
Written by Senator Eliot Shapleigh, www.shapleigh.org
Let’s go back to 2003. That’s when Rick Perry launched the first Great Texas Tax Shift. Back then, millionaires paid inheritance taxes. If a person died with more than a million dollars, the state would get a percentage of what had to be paid to the federal government.
Quietly, Rick Perry killed the Texas inheritance tax. Back then, the inheritance tax, which only taxed millionaires, delivered over $300 million to the Texas treasury each year. Instead, he proposed tuition deregulation. Under this new idea, tuition would be deregulated and ‘float’ to the level that the market might bear. What really happened was that taxes shifted from millionaires to students.
Under tuition deregulation, unelected regents, many of whom are millionaires, now set the tuition rate for students. As a result of regents hiking tuition without fear of facing the voters, tuition and fees rose from 2003 to 2006 by 47 percent at UT-Austin, 49 percent at TAMU and 47 percent at UTEP. In 2006 alone, inheritance taxes on millionaires were down $272 million when compared to 2002, while statewide tuition on students has increased by $266 million since 2004.
Now, let’s recall 2005. That’s when Rick Perry shifted taxes again. The taxes passed in the special session - the new business tax, cigarette taxes, and other taxes - cover only half of the cost of the property tax cut given in the special session. As a result, in 2008-09, we will start session $8 billion short.
In the end, the Great Texas Tax Shift of 2005 cut taxes by $920 million for everyone making over $104,000 and hiked taxes by $10.8 million on everyone making less than $33,000. Here’s how that looks:
George Bush has done the same thing at the federal level. Due to Bush's federal tax cuts, more than $1 trillion in tax cuts will go to the top 1 percent of households over the next ten years - nearly one third of the tax cuts’ total value. The 60 percent of households, however, will receive only 12 percent of the tax cuts’ value. Further, between 2004 and 2005, the average income of the top 1 percent of households increased by $102,000. At the same time, the average income of the bottom 90 percent of households increased by just $250.
Now comes the Great Texas Tax Shift of 2007. On June 15, Rick Perry cut over $153 million of funding from Texas's community colleges. In his written veto message, Perry accused college presidents of “falsifying their appropriations requests.”
“How do you accuse 50 community colleges of falsifying a report? We disagree with that statement,” said President Kevin Sharp of South Plains College in Levelland, Texas.
But what really happened is another tax shift. Perry's cuts in Austin mean more taxes or tuition in El Paso. So draconian were his cuts to many colleges that Herb Taylor, the editor of the Galveston County Daily News said, “it’s a bit like ordering a big meal in a restaurant for a large group—and then leaving the table before the bill arrives.”
Three sessions, three tax shifts—the Great Texas Tax Shift. Now students paying more tuition and taxpayers paying more taxes will pick up Perry’s tab.
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