Dan Patrick answers reporters' questions after a Sept. 29 televised debate. (AP Photo/The Daily Texan, Ethan Oblak)
Republican lieutenant governor hopeful Dan Patrick is attacking Democratic opponent Leticia Van de Putte for a nearly decade-old vote she cast in the Texas Senate.
Van de Putte’s purported transgression, though, was at worst a very common one: She joined every other state senator in voting “aye” on a tax bill amendment in 2005.
Patrick’s latest TV ad hits Van de Putte for the vote, saying she “even supported a tax on employee wages, an income tax on Texas workers.”
But tax experts say that’s misleading — in part, because the tax under discussion was an existing one on businesses that was being tinkered with, not a new one on individual Texans.
Patrick’s ad also omits crucial context, such as that the amendment was offered by a Republican; it was approved, 31-0, though it never became law; and the four GOP senators remaining in the Senate who also voted “aye” are today powerful figures with whom Patrick will have to work closely if he wins on Nov. 4. They include Finance Committee chief Sen. Jane Nelson, R-Flower Mound, and Natural Resources Committee leader Troy Fraser, R-Horseshoe Bay.
Is he calling them liberals, I asked Patrick spokesman Alejandro Garcia.
On Thursday, Garcia did not directly respond to my question, though he stood by the ad, which the Patrick campaign titled “Liberal Leticia.”
“She is clearly a liberal in every sense of the word,” Garcia wrote in an email. He attached a spreadsheet of legislative scorecards from the past two sessions that he said prove his point.
Leticia Van de Putte, in her post-debate press gaggle. (AP Photo/The Daily Texan, Ethan Oblak)
The ratings are by the Texas Association of Business and five staunchly conservative groups, including ones underwritten, respectively, by conservative Midland oilman Tim Dunn and billionaire brothers Charles and David Koch of Wichita, Kan. Curiously, the Patrick campaign did some averaging of the 12 scores, presumably to show Van de Putte is more liberal than Sen. Eddie Lucio, D-Brownsville, and roughly as liberal as Sen. Kirk Watson, D-Austin.
Garcia said, as the ad does, that Van de Putte supported a statewide property tax in 2003 and opposed property tax relief in 2007. However, as we noted in a story in Thursday’s paper, in one of the two votes from 2007 the ad cites, Van de Putte ended up with a bipartisan majority that had business backing in killing a Patrick effort to tighten residential appraisal caps.
The 2005 “wage tax” amendment, by then-Sen. Kim Brimer, R-Fort Worth, came as Texas lawmakers, under GOP leadership, grappled with how to raise enough state tax money to deeply cut local school property taxes. They were racing to comply with a court order that said the state’s school finance system was unconstitutional. Brimer’s amendment didn’t become law.
It took lawmakers two special sessions in 2005 and a third in 2006 before they finally traversed a minefield of prickly business sectors and professional groups and settled on a more broadly applied business franchise tax. While the old one largely was a tax on corporations’ net income, the new one swept in liability-protected partnerships and professional associations, which had previously been exempt. And it gave employers the choice of deducting employee compensation, cost of goods sold or a flat 30-percent cut from the total revenues that are taxed.
On Thursday, I spoke with some state tax policy experts, including some who declined to be identified because they fear offending Patrick if he wins the election and becomes the Senate’s powerful presiding officer. They agreed that Brimer’s measure wasn’t an income tax on workers, because it would’ve been paid by employers. And though it would have taxed wages, wages were one of three options a business could choose: Paying a tax consisting of 0.025% of net assets, 2.5% of net income or 1.75% of wages.
At the time of Brimer’s amendment, the Wall Street Journal’s editorial page and FreedomWorks leader Dick Armey foamed with indignation that Lt. Gov. David Dewhurst and the Senate were leading Texas astray — with a “fancy disguise for a personal income tax,” in the Journal’s wording; or, in Armey’s, “just a clever disguise for an income tax.”
Patrick cited the Journal editorial in his ad attacking Van de Putte.
Nearly three years ago, though, the Texas Supreme Court in the Allcat case ruled that the margins tax lawmakers eventually passed in 2006 isn’t a personal income tax, but a tax on businesses, not individuals.
Almost forgotten in the fierce rhetoric is that it was passed in order to offset the state’s giving more aid to schools so they could lower their local property taxes; and as part of a tax swap package that was supposed to be close to revenue neutral, though it turned out to be something of a net tax cut.
“They were just throwing one thing after another on the wall, to see what stuck,” said tax expert Dick Lavine of the center-left think tank the Center for Public Policy Priorities, recalling the Brimer amendment.
Yep. Sort of like a political campaign does.
You can see the Patrick ad here: