A Bad Idea Turns Into A Nightmare

Businesses around the state are only now learning how much they are going to have to fork over to Austin under the new business tax — which is due one month from today. The picture isn’t pretty and the results could be disastrous; which translates into lost jobs. The ugly picture isn’t even worth it: the new tax was meant to off-set property tax rate reductions, but most homeowners haven’t seen their tax burdens decline.

The new tax is confusing, it’s frustrating and it’s simply bad economics no matter how you slice it.

Businesses do not pay taxes, they never have and never will. Businesses remit taxes. But that burden is shared by business owners, shareholders and investors, employees, customers and the community at large. People pay taxes, businesses remit taxes.

Business taxes are also highly regressive in their impact on the poor. When a tax liability jumps from $1,000 to $50,000 with no change in the business’ profitability, low-level or unskilled employees are most likely to lose their jobs.

We must admit that business taxes are attractive to politicians; they hide the cost of government. In Texas’ case, the business tax let legislators keep spending money without restraint while pretending your taxes were being cut. Sure, some businesses actually saw a minor reduction in their property tax bill – but not enough to off-set the tax, and everyone knows that by virtue of the unreformed appraisal system, property taxes never stay down.

Republicans gave Texas this tax, and it’s in their political interest to be looking earnestly for ways to end it, or at least minimize its damage.

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Michael Quinn Sullivan

Michael is the CEO of Empower Texans. A graduate of Texas A&M, former newspaper reporter, one-time Capitol Hill staffer, think tank vice president, and an Eagle Scout, Sullivan is married with three children. He divides his time between the Metroplex, the rest of Texas, and Austin.

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