When Texas lawmakers found out they’d have more than $101 billion to spend this legislative session, some immediately began calling for tax cuts. Now one prominent business lobbying group has laid out its idea for what those cuts could look like.
For Bill Hammond, it’s a simple formula: Keep taxes low and the Texas economic engine keeps on chugging. Hammond, president of the Texas Association of Business, says making permanent the business tax exemption for companies that bring in less than $1 million in gross receipts would really fuel the economy, as would allowing those making more than that to exempt their first $1 million.
“Currently if you do $900,000 in receipts you pay no tax,” Hammond said.” If you have $1.1 million in receipts you pay tax on the entire amount.”
With a million-dollar exemption, the latter company would pay taxes on just $100,000.
Hammond also wants to lower the franchise tax rate by a quarter of a percent. And lest consumers feel left out, the proposal includes a sales tax exemption for college textbooks.
“Having bought many books myself and bought many more for my three children, it’s a very strong issue,” he said. “Kids are incurring a lot of debt. That’s the kind of thing we think they should be looking at, exempting college textbooks from sales tax. And also computers.”
Hammond’s proposals would cost the state more than $4 billion, money he says should be off limits to lawmakers, because spending it would put the state over a constitutional cap on state budget growth.
“Unless there’s a vote of two-thirds of both bodies to bust the constitutional cap, that money will either be sitting in the treasury forever, maybe, or, as we believe, it should be returned to the taxpayers,” he said.
But Hammond’s numbers don’t exactly add up. The $4 billion would be off limits based on the current size of the 2012-13 budget. But lawmakers are expected to add about $7 billion to that budget in a supplemental appropriation early this spring. That would increase the cap limit for the new budget and erase that $4 billion overage.
Hammond calls his proposal a starting point and expects more tax cut ideas in coming weeks.