Speech: Taxpayer Protection Comes First
Well, the remarks I have to make tonight are awkward but necessary. Awkward because the position I take on this bill is in direct conflict with my Governor, and my Speaker, and my brother. But necessary because the position I take on this bill happens to be in concert with the people I represent in District 107, and happens to be consistent with what I’ve believed for the last 20 to 25 years—positions on which I campaigned, and positions for which I was elected.
First, I’d like to thank the people who have spent so much time bringing this proposal to us because obviously we wouldn’t be having this debate unless people had put the effort that they did to give us something to debate tonight. Governor Perry, obviously, for recognizing the problem and putting a commission together, chaired by John Sharp. And I appreciate all the time the commissioners and those folks put into the recommendations that they brought to us, that then turned into a bill that the Ways and Means Committee looked at and then brought to us today and tonight to debate. So I thank all the folks who have put that time and effort into it, because it was necessary. But at that point, it becomes a policy debate, and it becomes time for us to look at the pros and cons of what we’re being presented with.
I personally considered two parts. There are two parts to the analysis of House Bill 3. This first part has to do with the direct proposal itself. I think there is a growing laundry list of real concerns about the implementation of this bill, we’ve heard a lot them today in the debate at the back mike, but frankly, what I want to focus on tonight are the major themes of what I find wrong with House Bill 3, and I consider them to be four.
The first two are related, and they have to do with the taxpayer, and I’m talking about the individual taxpayer. First, we’re being asked in House Bill 3 to pass a new business tax—a new business tax that obviously would become permanent and part of our system. In exchange for that permanent business tax, we’re being told that we would have a reduction in property tax, but at best that property tax relief is temporary because there is no provision in this bill that provides any protection for taxpayers against rates going right back up. And I think we know from history—even from recent history under our previous governor—that that’s what happens. And left to our own devices, we can expect that the rates would go right back up and we would have the worst of both worlds at that time: we would have a new permanent business tax and the same property tax problem that we’re confronting tonight.
Secondly, the rate that is being proposed under this new business tax is stated to be 1%. And yet once again, there is no protection for the taxpayer against that rate going up. So we are being told to take it on faith that 1% should be sufficient, and yet we can tell from the package we are being presented that because it requires 1 billion dollars of the surplus to make the swap work, we know from the outset that 1% won’t be enough. I know from my own hometown newspaper—who has editorialized twice in the last month that the rate needs to be 3% -that we can expect a non-stop drumbeat that that rate be increased and there is no reason to think that there will be any protection to the taxpayer from that happening.
The other two points are bigger picture than taxpayer protection specifically, and they ought to be as much concern to us as the first two. Number three is that we are here because of a lawsuit and a Supreme Court decision that was handed down that told us we had an unconstitutional property tax system that we needed to fix. And yet we are being told that, in House Bill 3, we should implement a new permanent business tax, but it does nothing to solve the problem that brought us here in the first place. There is nothing in this bill that even attempts to argue that the Supreme Court’s unconstitutional finding that was made in West Orange Cove will be solved. And so as a result, we can expect another lawsuit, and we can expect to be in front of the Supreme Court again, and we can expect to be in this chamber once again trying to figure out how to get out of an unconstitutional situation, and yet at that time we will have a new permanent business tax to deal with as well.
The final problem that I see with HB 3 is that it’s a new tax. In and of itself, that should give us pause because anytime you create a new tax for government, you basically have created a new engine for revenue for growing government. And I recognize different people in this chamber have different philosophies about this point, but certainly those people who subscribe to a philosophy of limited government should be very concerned about turning on a brand new faucet of revenue that obviously will go towards growing the size of government.
Now, Thomas Jefferson said a lot of great things. One thing that is very apt on this point is that “it’s the natural progress of things for liberty to yield and for government to gain ground.” Which is to say that when people don’t pay attention, when legislators don’t pay attention, when the people they represent don’t pay attention, we lose freedom and government increases. So it takes a constant vigil. And it takes continuous scrutiny to keep that from happening. I’m afraid House Bill 3 would be an example of us taking our eye off the ball and letting Thomas Jefferson’s admonition come true.
Now there’s a second part, and it’s even more frustrating than the affirmative proposal that’s brought to us on House Bill 3. And that is that we have a surplus. Not only do we have a surplus, but we have a surplus of fairly significant size—most recently tolled at $8.2 billion. I think we all can agree that it’s continuing to grow simply because of the situation in the economy. So to go to our taxpayers, go to our voters and say, “well, there was nothing for us to do but pass a new permanent business tax,” at the same time that we recognize that we have a significant surplus is doubly frustrating. And it’s not just a one-time “hey, let’s use the surplus and get out of Dodge” as we’ve read in the newspaper. What really needs to happen in this legislature—and starting in this chamber—is a change in the culture on how we do government. And taking our focus away from just the revenue side of the equation and thinking the only place we can ever go to solve a problem is to generate more revenue and ask more of the taxpayer.
We learned in 2003 that actually we can do it a different way, that we can confront something as significant as a $10 billion budget deficit and actually satisfy it by looking at the spending side of the equation. We just barely got started down that path when we got off the path. People in my class have a unique perspective on this experience because we came in our freshman year to this legislature when we were confronted with that significant deficit. And yet and even though we satisfied that challenge without raising taxes, we immediately, two years later, saw our budget grow by 19%. After that, one year later, we’re in this chamber having this debate about a new business tax. To me, that is about as clear a red flag as anybody needs to have about what path we have gotten off.
So yes, surplus now, deal with a Supreme Court decision by June 1st with the money that is available to us, but that is not where it stops. Where it continues is trying to figure out how to deal with government with the money we already raised out of the pockets of the taxpayers, as opposed to trying to find another pocket to pick.
You know, government is not too much different than the guy that goes to Golden Corral and goes through the line four or five times continuing to fill his plate with more and more dollars from the taxpayer. And when we have a surplus, it’s not too much different from someone locking the door and pulling up a table next to the dessert bar and thinking, “Man, I’ve really got it made now because surplus means I get to spend more money.”
I think you can tell a lot about someone’s philosophy when you ask them how they define the word surplus. Some people define it as I do as an overpayment of taxes. Other people define it as unappropriated revenue, which simply means I’ve got more money to spend now. And I think that’s where we are at this fork in the road. Surplus ought to mean something different to us. It ought to mean we owe something back to taxpayers who have overpaid.
Having said all that, I have heard two discussions around the Capitol since I’ve been down here the past couple of weeks, and I think they are indicative of the two discussions that maybe we’re having here tonight. On the one hand I’ve been hearing from grassroots individual voters and taxpayers from my district and across the state that are saying, “What are you doing? Please don’t tax Texas again. Use your head. Use the surplus.” That speaks to me. That resonates with me.
But the other discussion I’ve heard has been under this Capitol dome—in the hallways and in my office with people coming by to see me and even today. And that discussion is more along the lines of, “Hey, you know this paragraph down here at the bottom? If you could take this one line out and maybe say something a little different in this next paragraph, and use a colon instead of a semicolon, I think we’d be okay with that.” Well, that doesn’t resonate with me because that’s not what we ought to be here about.
There are major things and major philosophies that are reflected in this debate, and yet we seem to be ignoring all of them at the expense of who? The individual taxpayer. That is who I came down here to represent, and that’s why I’m going to be voting no. I challenge Governor Perry, and I challenge the Lieutenant Governor, the Senate, my Speaker, my brother, and the members in this House, that when they finally push that button, that the last thing that goes through their head is “remember the taxpayer.”