$4.9 Billion House Tax Cut Proposal
The Largest Tax Cut: The Texas House tax cut is a half billion dollars larger than the senate version, providing a $4.9 billion reduction on the sales tax and business franchise tax.
A Tax Cut for Everyone: Every individual and business taxpayer will benefit because every taxpayer pays the sales tax. The Senate does not provide a dime in property tax relief to businesses, and the Senate does not cut the property tax rate one cent, they only offer an increase in the homestead exemption. Their plan shifts the tax burden onto businesses.
A Tax Cut that is Permanent: In addition to lowering the sales tax for the first time in Texas history, the House plan offers permanent tax relief that every Texan will see on their receipt every time they make a purchase. The only way to undo this tax cut is for future legislatures to vote to raise the sales tax. The Senate plan offers temporary relief, only to homeowners, that will quickly evaporate as appraisals increase and as locals begin raising rates again. The state collects and controls the state sales tax. It doesn't collect and control local property taxes.
A Tax Cut that Shrinks Government instead of Shifting the Burden: The House plan reduces state spending, period. The Senate plan shifts local spending to the state, and then allows local school districts to once again raise rates, leading to more total spending. The House plan doesn't require a vote to bust the spending cap, or exempt additional spending. It shrinks government instead of shifting it.
A Tax Cut that Stimulates Economic Growth: Governor Abbott's one non-negotiable principle is that legislators cut the margins tax, and stimulate economic growth. LLB data shows the House plan generates more economic activity, creating 23,000 more jobs than the Senate plan, while increasing the state gross domestic product by $2.84 billion and personal income by $1.72 billion more than the Senate plan over the next five years.
A Tax Cut that Doesn't Pick Winners and Losers: The House plan doesn't pit employers who pay property taxes against homeowners, and it doesn't exempt additional businesses from the franchise tax, which was always intended to be a broader tax, with a lower rate. The Senate plan continues to hallow out the base of the margins tax, while the House plan gives every business that pays the margins tax today a larger rate reduction. The Senate plan keeps the state in the business of picking winners and losers, the House plan benefits every business.
To read a House/Senate comparison on the tax relief plan, please click here. Additionally, the Legislative Budget Board has provided us with an analysis of all three possible tax cuts, that document can be found here.
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