Taylor: "Spending is the cause of big-government, but taxes and debt are the symptoms"
AUSTIN, TX – Senator Van Taylor today helped pass what, if enacted, would be the largest tax cut in Texas history through the State Senate. A co-author of the tax package passed this afternoon, Taylor has been outspoken in his support for lower taxes and less government. In total, the Senate tax package would provide $4.6 billion in property and business tax relief.
"Without a vigilant eye defending the taxpayers, government will naturally consume everything in its path," stated Taylor. "Spending is the cause of big-government, but taxes and debt are the symptoms. Government cannot spend what it doesn’t take from its citizens. The taxes cuts passed today in the Senate would provide long-awaited tax relief for Texas families and small businesses."
The Senate tax relief package contained Senate Bills 1, 7, and 8, with SB 1 addressing property tax cuts and SB 7 and SB 8 cutting taxes on small businesses. All three measures passed the Senate and now await action in the Texas House.
On property tax relief, SB 1 increases the homestead property tax exemption, which exempts the first portion of individual's home from property tax calculation. As passed by the Senate today, the non-taxable amount of a individuals home increased from the first $15,000 to 25 percent of the median market value of a Texas home. This change protects homeowners from appraisal creep, where the rising value of Texas homes lead to an effective tax increase for homeowners. Currently the Legislative Budget Board estimates a $31,373 exemption for the tax year 2016. Since school districts are guaranteed a fixed amount from the state this tax reduction would reduce the state's general revenue spending, not the amount credited to school districts.
Speaking on property tax reform Taylor stated, "The math is simple, just because home values go up, that doesn’t mean it costs government any more to provide the same services to those same homes. Worse, while appraisal values increase the tax burden on working families, there is no guarantee that family incomes will rise at the same rate to offset this effective tax increase. This money belongs to the people, not government, and homeowners should not be punished with higher taxes when they are fortunate enough to see an increase in the value of their home."
As it relates to business taxes, in 2006, the Texas Legislature authorized the business margins tax, commonly known as the franchise tax, which taxes businesses based on their gross receipts before expenses. Currently, Texas is one of only five states with gross receipt style taxes. Additionally, compliance with the franchise tax requires several complex calculations and an additional set of accounting books which increase the costs for businesses to comply.
To address these issues, SB 7 reduces the franchise tax rate 15% and broadens the scope of businesses eligible to use the E-Z computation method, reducing the compliance costs for more businesses. SB 8 provides business tax relief for growing small businesses by expanding the franchise tax exemption from $1 million in sales to $4 million in sales. This would reduce franchise tax revenues to Texas by only 8% while completely removing the state tax burden on 52% of Texas businesses.
Taylor said of the tax cuts, "The franchise tax is an especially punitive tax that is tremendously difficult and costly to comply with and unfairly taxes gross receipts. Small businesses are the backbone of our economy. Instead of penalizing Texas businesses with stacks of paperwork and additional taxes on top of what they already pay, we should be letting them spend their time and resources doing what they do best -- creating jobs."
In their 2015 rankings of state business tax climate, the non-partisan Tax Foundation ranked Texas 39th amongst states based on their relative tax burden. The study noted that if the margins tax were to be repealed, Texas would have ranked 1st in business tax climate.
A seventh generation Texan and local small businessman, Van Taylor serves the majority of Collin County and a portion of Dallas County in the Texas Senate where he is widely recognized as a conservative leader. Taylor serves as Vice-Chairman of the Nominations Committee and also as a member of the Education, Health and Human Services, and Transportation Committees. Van and his wife, Anne, married after his return from Iraq and are the proud parents of three young girls. Van and his family reside in Plano near the land his great-grandfather farmed during the Great Depression.