Although Texas leads the nation in energy production and a variety of key economic indicators, we’re exporting much more than goods and services. Other states are following our lead on destructive taxing policy to the economic detriment of their residents.
Patrick Gleason, Director of State Affairs with Americans for Tax Reform, recently offered the following insight on Texas’ profound influence:
“Texas has understandably been the economic envy of the nation for a number of years…As such, other states look to Texas for leadership on matters of public policy and try to emulate what the Lone Star State does. When lawmakers in other states hear that ‘Texas did it,’ it gets their attention… That’s why the Right On Crime criminal justice reforms have spread so quickly to other states.”
Unfortunately, this influence can be a double-edged sword.
As an example, look no further than the margins tax, a destructive burden on businesses authored by Rep. Jim Keffer (R-Eastland) and passed by the Republican-led legislature in 2006.
“…If a bad policy is enacted in Texas it sets a bad precedent that is more inclined to spread to other states than if it had different origins…We are seeing this on display in Nevada right now, where voters will decided next month on a ballot measure that would impose a Texas-style margins tax in that state. Proponents in Nevada have one main talking point: ‘Texas has one, so it must be good’…”
Economists of all political stripes agree it’s one of the most damaging forms of taxation, especially for businesses struggling to make a profit. In fact, even the liberal leaning AFL-CIO has voted to oppose Nevada’s new tax inquisition after initially supporting it. Its members spoke out vocally in opposition over wide-spread concern that their jobs may be at risk if their employers are strangled by higher tax burdens.
Despite the fact that Texas’ booming economy resulted in a historic budget surplus in 2013, Republicans joined Democrats in increasing session-to-session spending by 26%, while killing efforts to rescind the oppressive margins tax.
The struggle against abusive taxation in Nevada is yet another alarming reminder that the rest of the country is not only watching, but also following our lead. The policies we enact in Texas are likely to be exported to other states—for better or worse.
The precedent that Republicans choose to set in the upcoming 84th Legislature will depend largely on the first vote cast by your representative—the vote for Speaker of the House.
If Joe Straus is reelected, expect the margins tax to survive unscathed for the fourth consecutive session.
