Reforming Public School Funding
By Senator Craig Estes
Ask economists and business leaders what Texas needs to do to promote a strong economy, and most will say that we need a well-educated work force and a fair tax system. For the most part, our individual tax burden is low when measured against the other 49 states. However, our property taxes are too high, our sales taxes are too one-sided, and our system of financing public education needs improvement. I agree that our property taxes can be lower, our sales taxes more fair, and our children better educated.
The lieutenant governor and the state Senate have presented a plan to the people of Texas that lifts the heavy burden of high property taxes, reforms the sales tax system to meet our modern economy and tackles the serious issue of public school finance reform.
The Senate plan would slash property taxes by eliminating the current local school property tax system and replacing it with a statewide property tax. The new rate would be capped at $0.75, a 50 percent reduction from the current constitutional cap, and local school districts could add up to $0.10 for local education enrichment. This would put the highest school property tax rate at just $0.85. Distributing the property tax liability statewide, instead of just locally, will allow us to collect needed public education revenue, but at a lower tax rate.
The Senate plan reforms our sales tax system to meet our modern economy. In exchange for lower property taxes, the sales tax would be increased by less than two cents and expanded to some previously exempted services like attorney fees.
Exactly which services will be taxed is still a matter for debate. However, it never really has made sense to most people that someone who buys accounting software at Wal-Mart pays a sales tax on the software product, but someone who hires an accountant pays no sales tax on the accounting service. Basically, if you are willing to do the work yourself, and just need a tool, you pay a tax on the tool. However, if you are capable, or willing to pay someone else to do the job for you, you pay no tax.
The combined reformation of both the property tax and sale tax systems will ease the burden of taxes on property owners and shares the responsibility with all who participate in the economy. Most importantly, it stalls the discussion of a personal income tax. Pro-tax advocates argue that the only solution to our revenue needs is an income tax. I firmly disagree, and this plan clearly demonstrates that tax reform solutions that do not include taxing personal income are real and possible.
In addition to reducing property taxes and reforming the sale tax, the Senate plan abolishes our current "Robin Hood" system, which caps taxable property wealth in certain districts, and transfers the additional tax revenues collected to non-property wealthy districts. This program was intended to comply with court orders to balance and equalize the funding of education for all our children. However, the program has created problems for the districts deemed wealthy and, ten years after its creation, still has not solved the problem of equitable funding.
The new Texas Education Fund, created by the Senate plan and funded by the statewide property tax and additional revenues generated from a reformed sales tax, will increase our state's per capita spending on public education and creates a more fair and equalized funding system. It also places more responsibility for education funding with the state, as directed by the State Constitution.
The Senate plan is not the end of the process, but the beginning of the debate on these issues and solutions. Whether this plan is fully considered during this legislative session or during a special session called by the governor, there is a consensus that a solution is needed. Through our deliberative process of debate, a final plan eventually will be given to the voters for their approval. Lowering property taxes, creating a fair and low tax burden, and improving the quality of public education are the real goals and should be our focus throughout this process.
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