Hammer, paint, and duct tape: Tax reform revisited
By DS Gands
May 18, 2004
Print this page
Email this article

A couple of weeks ago, I wrote a column on broad-based business taxes, and upon reflection (and listening to the uproar), this follow-up is inevitable.


On May 16th, the Houston Chronicle published a piece on taxing lawyers.  Yes, taxing layers.  Back in the olden days of yore, we had a businessman for a Governor.  His name was Bush.  Regardless of what you may think now, he had proposed and (thought he) had enough support for a broad-based business tax, but by 11:59, he found out that some of his troopers went AWOL.  His friend, Michael Boone, of Haynes & Boone, an International Law firm, was an advocate of this tax reform proposal, an attorney, and has recently revisited these revelations in that Houston Chronicle piece by Rick Casey.  Today, Michael Boone continues to travel the state to support a broad-based business tax, and he may just have the solution to a rather sticky problem – property tax and school finance.  It suggests a vote where the headliner is asking the citizens if they want to lower their property taxes by fifty cents – vote for a tax on lawyers.  Apparently he thinks it would be a landslide.


It isn’t about perceived ‘sins’ like smoking a cigar and sipping brandy, or chewing snuff and swilling an ice cold beer (for the sake of recognizing that sins are not class or taste limited), or gambling (which could be anything from a Las Vegas-type bet to a nickel slot machine), it’s about businesses paying taxes that are not currently doing so, especially highlighting those with high dollar services – like attorneys.  (And, I must admit, I have heard the jokes about ‘sins’ in that category, as well.)


The Senate, including members of the Joint Select Committee on Public Education, was scheduled through midnight on Saturday.   There were major concerns over House Bill 1 that was sent to the Senate without any real substance, from the House.  Before the House adjourned for the week on April 27th, the school finance bill was not ready and more time was needed.  As it turned out, the House didn’t have anything but a shell to punt to the Senate.  The House adjourned this morning, and the Senate this afternoon – Round 4 is over.


It seems there will be a brief interim of a few weeks for the committees to continue hashing out a plan on taxes, and instead of burdening the system with all the trickle effect revenue they have spent a year trying to put together, they may try and focus on a super-sized tax such as income or sales taxes.   It will take them awhile to look at it and sell it to the legislators, much less the public, but it all boils down to one thing – it’s going to get money thrown at it from somewhere.   Everybody’s money.


Again, I ask, why does this have to be so hard? 


Well, first of all,  the structure is a mess that resembles a can of worms, i.e., the domino trick, so with each item that was being considered for change, there could have been a hundred more that would require modification.  The very complex, inter-twined codes that have been beat to fit and painted to match, have been undergoing the perspective of ‘duct tape can fix anything’ for the last year.  That may be all about to change.


I do not understand why the legislature was taking on the responsibility as the moderator of good management practices in the school system.  Legislating administrative staff and streamlining management practices should be the duty and responsibility of the Texas Education Agency and the Districts.  If they cannot hold the reins on their own systems, it isn’t time to begin legislating them, but replacing them with personnel that can produce operations and budget management that is efficient and effective.


Of course, the Republicans are concerned about the back draft this will cause at the ballot box, and I am sure that the Democrats of the past will get the entire blame for the condition of the current system, but I would just like to say a few words about the common man’s perspective on the entire issue.  He (or she) is out here paying for all of this, including all the special sessions for all the special issues, and he really isn’t getting his money’s worth.


If he’s got kids or grandkids, knows any kids at all, or pays taxes - he knows what’s going on in his local school.  He sees the massive burdens placed on the administrations and teachers, not to mention the oppressive testing of the children.  He sees what he considers to be high costs in a system that is out of control, but he has little affect on a board, and his voice is drowned in the halls of the regulating agencies.  He feels over-taxed, burdened with the battle in the trenches, and ignored by those who could do something about it.  He has had the patience of Jobe.  Frankly, he doesn’t see that robbing Peter to pay Paul is a solution, when Jobe is still going to have to reimburse Peter and pay an ever-increasing cost.


So, in reading the article by Rick Casey, I was impressed with the courageous revisiting of the broad-based business tax solutions offered by Michael Boone, that were, in fact, an effort by the former Governor.  The concept is tough to swallow for some, but they are property tax and sales tax entities themselves, and they shouldn’t be left out of the consideration to right the ship.  Of course, there is the issue of the $21B that was promised by the No Child Left Behind Act that never got distributed.


Attorneys could do well in supporting this proposal.  The headlines would be splashed across all the front pages – ‘Attorneys Support Best Futures for Texas’, or ‘Texas Attorneys Save School Finance Reform’, or ‘Texas Attorneys Step Up – Only the Best for Texas Kids’.  Can you imagine what it could do for image?  It would wipe the slate clean.


Folks, the dominos are in place.  If someone doesn’t step up to the plate (without bumping the table), discriminating tastes about categorical burden are going to force small business owners to close their doors, schools are still going to continue to struggle with funding in a march toward fiscal ruin, and the taxpayer is going to carry the brunt of the load – regardless.  The sales tax increase was to appease the local government outcry for a loss in tax base from the property tax shifts, so that won’t really be of benefit to the school funding, at all.


HB1 didn’t even make it out of committee this weekend, and we have another session ended at  $1.7M each (times 5?).  About 1000 protested, by what was characterized as a Hispanic group, at the Capitol Saturday, decrying the system and calling for privatization and elimination of the public school system.   No doubt there will be more protests since the Bill wasn’t passed.  The average family cannot afford to educate their children, and that’s a fact.  At the current rates, the state funding pays 40%.  Sixty percent is a shared equalization of funds from the public.  That’s better than some other states.


There are systems in place that are working, and working well in other states.  If the politicians, that were elected to represent the people, would consider that there is the tried and true to be considered, perhaps politics wouldn’t play such a major role in such a critical issue.  One must take their hat off to David Dewhurst and the Senate, though.  The House let us, and them, down, and they have been struggling with this effort for over two weeks without a single partisan battle.


Regardless of what Party you support or who your official is you have to respect the efforts of the Senate to address this vital interest of Texas and her future.  We, as taxpayer – each and every one of us - have to swallow the bitter pill, too, and accept an income tax or a broad-based business tax as a remedy.  Because labeling people in a category of ‘sin’ for taxes is absurd, and ignoring the resources that are available is blatant politics.   Besides, sins are not a stable source, if you ask me.


I hope the Senate is smart enough to contact the resources they need, now that they have a full grasp of the current system and funding resources, to consider the broad-based business tax, and see if they can lean on policies to insure efficiency and effective management in our public school system.


This columnist is asking the Senate to invite Michael Boone and his group to present their proposal to the Senate and House members in the interim.  Just listen and give it due consideration.  At least the voters will know you did. 


It beats the thunder out of duct tape.