“Let’s Solve School Finance Now”
May 5, 2005
So, Texans, your choice: good schools, with an education tax on income? Or do we keep driving Texas and our children to the bottom?
Written by Senator Eliot Shapleigh,
To compete in a world economy, Texas must have top-notch schools. We don't, and we need a state income tax to get them.
What’s being hashed out in Austin won’t do the job. Somehow, the debate is about a few cents off property taxes, not great schools and educated Texans. Under current legislative proposals, 10 percent of the wealthiest Texans get tax cuts and 90 percent of the rest of us get tax hikes. Great schools get an I.O.U.
Before you draw your six-shooter, hear me out -- and I'll explain how a modest flat tax on income could not only provide good schools, but actually lower the total tax bill for most Texans.
I represent El Paso in the Texas Senate. Speaking to groups all around the state, I first ask if we need an income tax. Usually about 10 percent say "yes," and at least 70 percent say "no."
Then I say, let's solve school finance, and your solution must get a two-thirds vote - the same practice followed in the Senate.
Next, on a Texas map, I show which school districts under our "Robin Hood" school finance system send property tax money to other districts, and which receive it. Most folks are shocked to see that nine out of 10 students, or 88 percent of the state's school kids, actually get money rather than give it.
Although equalizing spending on schools has helped narrow the test score gap between students in poor and rich school districts, we can still do better.
I ask whether every Texas child, regardless of race or income, should get a good education. Everyone always says "yes."
That's good. Because in Dallas, for example, according to the Texas Education Agency, 66 percent of kids entering first grade in public school are Hispanic, 27 percent are African-American, and 50 percent are limited in English proficiency.
I next ask what makes for good schools. The answers always begin with good teachers. Other things mentioned include smaller classes, rigorous academics, more technology, science and math, arts and languages, and good facilities.
These things are indeed what make for quality schools, but at the rate we're spending now, just to keep up with current enrollment growth will take $1.5 billion each two-year spending period. Getting to the national average, however, will take a lot more.
Among the 50 states, we're 38th in state aid per pupil, 48th in Scholastic Aptitude Test scores, and according to the U.S. Census Bureau, we’re 50th, dead last, in high school graduation rates.
To get just from our current 37th ranking in education spending to the national average would take $613 per pupil, or $5.6 billion more every two years.
You say we're already spending too much? Hardly.
Texas ranks 50th in state spending per person - again, dead last. Yet Texas has a huge prison population; two thirds are school dropouts. Even "law-and-order" legislators are realizing it's wiser and cheaper to educate rather than incarcerate.
People usually say we can, and should, do better. But our antiquated school finance system is a problem.
Texas is still structuring its tax system around a manufacturing based economy, even though our primary industry is now knowledge and information.
Most states have a three-legged stool of sales, property and income taxes. Texas, however, has just two. We are one of just seven states with no state income tax.
As a result, we're 15th in the nation in property tax per person, and we have the third highest sales tax rate among the 10 largest states. If passed, current proposals in Austin may well make ours the highest sales tax, fifth highest business tax and even after property tax cuts, sixth highest property tax.
And, in six years, when the measures are fully implemented, most Texans will pay more dollars for property tax than they do today.
Most Texans think their property tax is their largest tax bill. But the Comptroller estimates the average property tax for a family of four with income of $50,643 annually is $1,455, while sales taxes are $1,917 - 32 percent more.
The two-year cost to cut property taxes in half ($14.8 billion), replace Robin Hood payments ($2.2 billion) cover growth costs ($1.5 billion) and get us to the national average in school spending ($5.6 billion) totals $24.1 billion.
According to the Comptroller, to raise that with the existing sales tax, we'd have to hike it from the current state rate of 6.25 cents to 17.3 cents. But if we copied Kansas' income tax, where a family of four making less than $21,000 a year pays nothing, to a top rate of 6.45 percent on income over $84,400, we'd actually lower the total tax bill for families making less than $62,000 a year. Most Texans get tax relief, not tax hikes. We could even achieve this with a flat tax on income of only 5 percent.
How do we assure the money raised will lower property taxes and otherwise go for schools? No problem. Thanks to the late Lt. Gov. Bob Bullock, the Texas Constitution has said since 1993 that two-thirds of any income tax proceeds must be used to cut property taxes, and the rest must go for education.
Not only that: to pass a Texas income tax requires not just a majority vote of the House and the Senate, but also of Texas voters in a statewide referendum.
So, Texans, your choice: good schools, with an education tax on income? Or do we keep driving Texas and our children to the bottom?
Think about it. If you agree it's the smart thing to do, please ask your state Senator and Representative to give you a chance to vote "yes" for good schools.