Senator Eliot Shapleigh - El Paso, Texas

The Texas Senate passed a tax bill early Wednesday that is a bit less harmful for most households than the House version. The differences between the House and Senate appear negotiable, so a conference committee likely will reach a compromise.

The principal goal of this major tax legislation, House Bill 3, is to reduce local school property taxes and (at least in the Senate) to improve public education funding. But many property owners might be disappointed when they see how much — or little — they actually save.

The approximately one-third cut would apply only to the operations and maintenance portion of school property taxes, not the portion to finance construction projects. Nor would the cut apply to city, county, hospital or any other special district property tax.

Of course, the more valuable the property, the bigger the tax cut, for homeowners and businesses alike.

And that's partly why, even with a property tax cut, the two versions of HB 3 would have the net effect of increasing taxes for the 80 percent of Texas households that make less than $100,000 a year.

Those making more than $100,000 — and likelier to own more expensive homes — would break even or get a net tax cut, according to Legislative Budget Board estimates.

Sen. Steve Ogden, R-Bryan and chairman of the Senate Finance Committee, said much of the net tax increase on most households stems from higher tobacco taxes. He's right that Texans can avoid paying that tax altogether by not smoking — a laudable public health goal.

Also, the Senate version (but not the House's) would raise taxes on alcoholic beverages, making it more expensive for Texans to drown their sorrows as they try to quit smoking.

Still, the House version is tougher on consumers because it would raise the sales tax on all purchases by 1 cent and broaden its application, while the Senate would raise it by half that and not broaden its reach.

If there's a silver lining, it might prove to be a more widely applied business tax to replace the state franchise tax, which ever fewer businesses pay because of a loophole in state law.

The Senate put its own tweaks in the proposed business tax, but in the end, it moved toward the House approach of offering businesses a choice in how to calculate their state taxes.

Assuming the House and Senate find a compromise, the question then will be what most Texas voters feel most: a modest cut in their property tax, or paying higher sales, cigarette and alcohol taxes every day — with no appreciable difference in the quality of their schools.