If anything demonstrates the folly of placing tax-cut rhetoric over the reality of spending restraint, it’s the creation of the state’s Gross Margins Tax by Republicans last year. This monstrous violation of economic principleÂ (and common sense) is the direct result of politicians wanting toÂ placate us with tax-relief talk, without the pain of making tough spending decisions.Â
This evening I’ll be in Pasadena, outside Houston, making a presentation about the Gross Margins Tax, at a Town Hall Meeting organized by State Sen. Mike Jackson and my friends at the Texas Conservative Coalition. Sen. Jackson was one of the very few legislators to vote against the Gross Margins Tax. That alone gives him high marks.
But let’s talk for a second about the gross margins tax. Never in human history has any business paid a penny in tax. Not one, not once. Now, businesses have remitted a lot of taxes. But the reality is that only people pay taxes. Its the business owner who takes home less profit, investors who see a smaller return, employees get smaller wage increases, the community finds fewer new jobs being created, and customers experience higher prices.
But at the end of the day, it was people who paid the tax — the business just writes the check.
Business taxes are convenient ways to hide the cost of government. So when the Texas population was (and still is) frustrated with high property taxes, the Legislature chose to shift the taxes around, making them less transparent, so that they wouldn’t have to do the hard job of making difficult spending choices.
But it is a hard job you and I don’t make any easier. We cannot have it both ways; either we want lower taxes OR we want more spending. But in no case can we have lower taxes AND more spending.
The great irony, of course, is that not only are we saddled with a new business tax, but property tax burdens have yet to fall thanks to an unreformed appraisal system.
Not unexpected. Any time politicians get to create a new tax without completely, outright eliminating an existing one, both taxes end up being high.
Until we more clearly articulate our frustration with big-spending government that produces too few tangible results, we will continue to see shifts toward policies that violate basic economic principle.