Ellis/Carona Plan to Review Tax Loopholes Debated in Senate
SJR 12 /SB 140 requires Comptroller, Legislative Budget Board to review loopholes and preferences
(Austin, Texas)—Bipartisan legislation by Senator Rodney Ellis (D-Houston) and John Carona (R-Dallas) to identify and review Texas' tax preferences, ensure that they are carrying out their intended purposes, and advance more efficient and effective economic policy was debated in the Texas Senate.
The Senate Finance Subcommittee on Fiscal Matters heard SJR 12/SB 140, legislation to help eliminate inefficiencies in the Texas tax code, raise much-needed new revenue, and reduce long-term budget deficits.
"Our ongoing budget challenges demand that we be as prudent as possible with taxpayer dollars," said Ellis. "The Legislature needs regular access to comprehensive analyses that allow us to make educated decisions about which tax preferences are working, which need reform, and which should be eliminated."
Senate Joint Resolution 12/SB 140 would:
- 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 six years.
- Review and Study -- The Legislative Budget Board would perform reviews of those state and local tax preferences over a six year period. The LBB would then make recommendations to repeal, retain, or amend a tax, as well as provide drafts of any proposed legislation needed to implement the recommendations in a report to the Senate Finance Committee and the House Ways and Means Committee.
- Finance and Ways Means Final Report -- Both the Senate Finance and House Ways & Means Committee would review the LBB report, modify it, and submit a final report to the Governor, Lt. Governor, and Speaker, along with holding a public hearing on final report.
- Automatic Sunset for New Tax Breaks: Under SJR 12, all future tax breaks would be sunset after 6 years.
"The Texas Tax Code contains several preferential tax breaks that were inserted into the code in the distant past, but live on long past the time the rationale become unjustified spending programs 'hidden' within the tax code," said Ellis. "These breaks cost Texas billions of dollars in revenue and may provide no real economic benefit. It is long past time to scrub the tax code for all such wasteful provisions."
The Legislature makes extensive efforts to determine the efficacy of every state dollar spent on education, health and human services, and criminal justice. With that data, lawmakers weigh the costs and benefits of different policy options in an attempt to make the most well-informed decisions. In addition, state agencies are subjected to a "sunset review" every twelve years to determine their effectiveness, and if the agency's functions need to be continued. The tax code would benefit from a similar periodic review of all its exemptions, exclusions, and special treatments to answer one simple question--are they working?
Last session Texas faced a record budget deficit, and in 2013 the effects of the cuts to deal with that crisis continue to reverberate. Texas has an obligation to take a serious look at whether or not it responsible fiscal policy to spend billions of dollars in tax giveaways to profitable corporations, before we cut vital services for Texas families. SJR 12/SB 140 puts the same level of scrutiny and accountability measures key programs must undergo onto tax subsidies.
"Our current budget continues to fall short of what is needed and what is possible," said Ellis. "As we struggle to meet our needs, Texas must to be as prudent as possible with all of our tax expenditures and giveaways. We need to be honest about what these tax breaks really are--they are budget appropriations tucked into the tax code. These folks are getting an appropriation, budget cycle after budget cycle, outside of the budget process, without having to go through the same level of scrutiny as every other group looking for appropriations."