01.31.13

Here is what’s the matter with Texas

Posted in 83rd Legislature, Around The State, The Budget at 11:55 am by wcnews

Texas is a low tax state, for the wealthy. That is the more money you the less you pay in taxes, but the opposite is true too, the less money you make the more you pay in taxes. Better Texas Blog has the details, Study–Texas Has The 5th Most Unfair Tax System.

You have heard many times how Texas ranks 38^th on state spending on public schools and 50^th on state spending overall per resident.  Well, finally Texas ranks 5^thin something.

Unfortunately, it’s in the ranking of how unfair our state and local tax system is.

Texas asks its lowest income families to pay four times as much in taxes, as a percentage of family income, than it requires of the 1% with the highest incomes.  And Texas asks its middle-income families to pay nearly three times as much in taxes as it does of the top 1%.

This ranks Texas as having the 5^th most unfair (“regressive”) tax system in the country.

What’s worse is that, even though many Texas politicians  brag about the state’s low taxes, poor Texas families pay a higher percentage of their meager family incomes in state and local taxes than to similarly poor families in all but five other states.  That’s because even Texas’ relatively low taxes are distributed so unfairly that the poorest must still pay an unusually high percentage of their income to support public services.

It’s important to know this especially in the context of what Sen. Tommy Williams, the Texas Senate’s new budget chief said this week.

Williams, R-The Woodlands, said that in the total budget, including federal funds, the health and human services programs listed in “Article II” now run neck and neck with the education section that funds public schools and state colleges and universities: They each would cost about $70 billion over the next two years, if Senate GOP leaders’ starting budget were passed. (It won’t be.)

“We cannot continue to fund 14 percent annual growth in Article 2, which is what we had roughly over the last 10 years, and hope to build all the facilities that our institutions of higher education have asked, the highways that we need and the water infrastructure that we need for out state to continue growing,” he said.

Medicaid, other aid programs and various state supports and protective services are galloping along at “unsustainable” rates, Williams said. They threaten all other programs, he implied.

He did not mention, though, the budget pressures caused by the failure of a 2006 school finance and tax-swap package to produce as much money as expected. Or Tuesday’s call by Gov. Rick Perry for more tax cuts and haste in ending budget gimmicks, which if heeded also would compete for scarce bucks with schools, public safety and transportation. Nor did Williams, now chairman of Senate Finance, note for comparison purposes that his starting budget provides 2 percent growth in social services spending. He did say that the Senate withheld $400 million needed for Medicaid caseload growth, to force a discussion of assumptions behind the projections.

Still, Williams, a Methodist churchman and investment-company owner, has made strong statements recently about the state’s moral obligation to take care of completely helpless Texans.

“This is the heart of the budget, this is what decides how we look to the rest of the world because it says something about who we are, how we take care of these people,” he said Wednesday.

One of the more interesting developments to watch this session will be what’s likely to be an evolving definition, as the money constraints become ever-tighter, of who are Texas’ worthy needy — the vulnerable with no one to help them, the true and rightful heirs to one of the nation’s least-generous social safety nets.

As I read that Sen. Williams is saying if we want more money for infrastructure spending for higher education, roads, and water then we can’t have a safety net too.  It’s a threat, don’t make me cut your funding by keeping benefits for the needy in tact.  As Garrett does a great job of  showing, it looks like William laying the groundwork for cutting benefits for those deemed “unworthy”.  When that will be determined and who will make that determination presumably will be decided by the time the budget is finished.

What we know is that Texas has always been a low tax, low service state.  And those at the lower end pay a disproportionately high amount of their income to keep the system going.  The wealthy… not so much.  Obviously those who currently run our state government have no intention of fixing this problem.  And any plans they have for so-called “tax reform” will only skew the problem more in the wealthy’s favor. The Texas Tribune has more on a plan to shift costs to local governments, Senators Take On Health Care Costs, Medicaid Expansion. Which would mean higher local property taxes.

It’s hard to imagine this changing anytime soon in Texas. It would take a complete political and culture change for their to make funding  things like public and higher education, health care, and infrastructure a prirotiy. The main problem with our tax system in Texas is that it’s unfair. And until that unfairness is fixed, we will have to keep making these least bad choices for middle class Texans on down, while the wealthy escape without any sacrifice. There is an alternative, (see here and here).

The entire ITEP study “Who Pays?” can be found here.  And the Texas numbers are here.

Further Reading:
Medicaid, health savings lower than projected.

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