Ellis: Yet More Tax Giveaways with Less Transparency is Unacceptable
HB 500 cuts $714 million in taxes, yet eliminates review of $44 billion in tax subsidies
(Austin, Texas) — Senator Rodney Ellis (D-Houston) today blasted the latest plan to add hundreds of millions of dollars in tax breaks while continuing to blatantly obstruct all efforts to catalog and review over $44 billion in state tax giveaways.
At issue is the Conference Committee Report to HB 500, which adds over $700 million in franchise tax cuts for Texas businesses. Last week, Ellis added an amendment - by a unanimous vote -- which would identify and review Texas' tax preferences, ensure that they are carrying out their intended purposes, and advance more efficient and effective economic policy was passed by the Texas Senate.
"The Texas tax code is riddled with tax subsidies, giveaways and loopholes that were put in place years ago by special interests and have never even been reviewed," said Ellis. "No one in state government even knows how many are in the code, how much they cost, or if they are even working!
"Just last week, this body unanimously said it was time to shine the light on those giveaways," said Ellis. "Now, in the dead of night, we have again chosen to protect these special interest tax subsidies in a cloak of darkness and secrecy while adding hundreds of millions more breaks to the code. That is outrageous."
The Ellis amendment would have:
- Identify Tax Preferences in Code -- Require the Texas Comptroller of Public of Accounts to identify all state and local tax preferences in the Tax Code.
- Set Schedule for Review -- The Comptroller would set a schedule for all to be reviewed in next twelve years.
- Review and Study -- The Legislative Budget Board would perform reviews of those state and local tax preferences over a twelve-year period.
According to state reports, Texas spends $44 billion annually on these incentives, but with almost no accountability or oversight. To keep that in perspective, Texas is eligible for $100 billion over 10 years to expand Medicaid.
To many Texans, these so-called incentives are simply another way to game the system. For instance, Texas gave retailers a tax break of over $200 million in 2010 simply to file their sales tax on time. Texas also gave away over $7.4 Billion in revenue from 2004-09 to Natural gas producers, due to an antiquated definition of "high cost" gas that reduces the tax rate actually paid from the 7.5% in statute to under 2% (1.1 to 1.9).There's even a loophole that allows private country clubs to skip out on millions of dollars of property taxes. Using the loophole, the state's largest beneficiary, River Oaks Country Club, has a market value of $79 million but is assessed at only $4 million. The 2014-15 budget even includes nearly $40 million to subsidize Hollywood movies.
The truth is, as a result of the sunset process, the legislature knows virtually everything there is to know about every penny spent by agencies such as Texas Board of Architectural Examiners, The Texas Commission on the Arts and the Windham School District with the Texas Department of Criminal Justice than we do about the Texas tax code. Furthermore, this session there are nearly 100 bills on the cusp of becoming law which mandate thorough studies of such issues as the prohibition of dairy farming in certain areas of the state, or requiring research papers to be available to the public.
"We brag about transparency, we review every agency and every dollar spent on our school children, or for grandma at the nursing home, but we let nearly $50 billion every session drain out of here with not so much as a glace," said Ellis. "We need better accountability measures on corporate welfare and tax giveaways just like every other government program, but just when it looked like we were going to have it, the special interests and lobbyists won.
"And the people lost."