Latinos For Texas Blog

The buzz around the state capitol has been school finance.. how will we fix it? Sin taxes? Higher sales tax? $1 state property tax?

Few legislators have been as bold as St. Rep. Eddie Rodriguez. Since last session (and maybe even before that), he has been working on *gasp* a state income tax plan. The Quorum Report recently posted a story on the Rodriguez plan. Notably, while Republican leaders have been professing to do anything to save public education and our children.. they have been quietly killing this legislation. QR reports:

Rodriguez introduced state income tax legislation during the last regular session but with Gov. Rick Perry saying it was the one option that was not on the table, Rodriguez could not even get a hearing for his bill. Rodriguez said his immediate goal during the upcoming session was to get a hearing. “We have got to be part of the dialogue. Nothing should be off the table when it comes to the education of Texas kids,” he said.

Help Rep. Rodriguez get a hearing - call, e-mail or visit (if you are so inclined) the Chair of the House Public Education Committee - Rep. Kent Grusendorf.

Capitol Office
Room CAP 1W.02
P.O. Box 2910
Austin, TX 78768
(512) 463-0624
(512) 463-1398 Fax

Update: Reference HB 90. Click here to read the bill.

The Quorum Report
RODRIGUEZ SCHOOL FINANCE PLAN WOULD SLASH PROPERTY TAXES
Austin lawmaker’s state income tax proposal would add $5.1 billion in new education spending
Lt. Gov. David Dewhurst says he is working on a “bold” school finance plan that would cut local property taxes by a third and add more than $1 billion in new education spending.

An Austin lawmaker with strong ties to the Rio Grande Valley says his own bold plan would cut local property taxes by around 90 percent and add $5.1 billion in new education spending.

State Rep. Eddie Rodriguez (D-Austin), who was born and raised in McAllen, is one of the few lawmakers prepared to file legislation to create a state income tax to drastically reduce property taxes and fix the public school finance crisis.

“This plan would give the biggest property tax reduction and raise the most money for education,” Rodriguez said. “My plan also eliminates business property taxes, which will make for a much healthier business climate.”

Rodriguez has his own Web site - www.texastaxrelief.com - with a built-in calculator that allows Texans to find out how much their overall tax bill would change. “The top two or three percent would pay more, those earning more than $200,000 a year,” Rodriguez said. “The vast majority of Texans would be better off.”

The plan involves shifting the burden of funding school operations from local property taxes to the state. The Maintenance and Operations element of the property tax, which represents about 90 percent of most local school taxes, would be abolished entirely.

The state would pick up the tab by using revenue collected through a State Education Income Tax. Thus, the loss of $13.9 billion in M&O property tax would be replaced with $19 billion in state income tax revenues, producing an additional $5.1 billion in new education funding.

Rodriguez said his plan utilizes a progressive rate of taxation, based on adjusted gross income, which is sensitive to each taxpayer’s disposable income. A personal exemption of $3,200 is allowed for every filer and for each dependent declared by that filer. This would be the only exemption.

On all remaining income, the rate would be one percent on the first $25,000, two percent on the second $25,000, and 3.5 percent on the third $25,000. A five percent rate would be levied on the fourth $25,000, 6.5 percent on the next $50,000 and seven percent on the next $50,000. A 7.5 percent rate would be levied on additional income above $200,000.

“One of the most important things about my plans is there is no longer a need to send recaptured money from property rich to property poor districts,” Rodriguez said. “In almost every other plan, Robin Hood is kept in place. Any plan that does not eliminate Robin Hood and share-the-wealth is going to be a short-term band aid fix.”

Rodriguez said his plan also means there is no need to increase sales taxes, which would disproportionately hurt working and middle class families. He said these sections of society would also suffer if legislators introduce a business activity tax or expand the franchise tax because such taxes “would inevitably get passed on the consumer.”

Rodriguez said his income tax plan comes with built-in safeguards to prevent the Legislature from re-introducing property taxes. And any increase in the income tax rate would, unlike the sales tax, require voter approval.

Rodriguez said the extra revenue his plan generates would be particularly advantageous to fast-growing Austin ISD, which, as a property-wealthy district, gives $150 million back to the state each year yet also has a majority of its students qualifying for free or reduced lunches.

Rodriguez introduced state income tax legislation during the last regular session but with Gov. Rick Perry saying it was the one option that was not on the table, Rodriguez could not even get a hearing for his bill.

Rodriguez said his immediate goal during the upcoming session was to get a hearing. “We have got to be part of the dialogue. Nothing should be off the table when it comes to the education of Texas kids,” he said.

So far, Rodriguez said, his plan was gathering momentum among the elderly and teachers organizations. He said a number of his legislative colleagues, Republican as well as Democratic, had privately expressed support.

“I think a lot of people realize we need to find a new funding source, but, unfortunately, they are worried they might face defeat,” Rodriguez said. “Support for the income tax will come from the bottom up. It has to come from constituents who are fed up with high property taxes and those that live in poor areas who see their schools are not getting proper funding.”