Governor Pushes Tax Reform Plan In East Texas

Governor Rick Perry stopped at Mccoy's' in Nacogdoches. He wasn't buying hardware but instead touting a tax plan that he says will please businesses, homeowners and schools. The plan is for the most part the work of Democrat John Sharp, chairman of the Texas Tax Reform Commission.

As Sharp spent the day in West Texas pushing the plan, the governor traveled to East Texas. He was joined by members of the commission and the CEO of Mccoy's. The governor wants to present to the public a bi-partisan effort toward tax reform. "I'm looking for a bipartisan approach to this. I want folks on both sides of the aisle to see the thoughtful approach that this is the right thing for the state of Texas. We got our hand out to Republicans and democrats alike saying this is the best interest for the people of the state of Texas."

The plan would pay for part of the reduction in school property taxes with a broader based business tax. Loopholes would be eliminated. The franchise tax rate would go from 4.5% to 1%. The small business exemption would be doubled from $150,000 to $300,000 in total revenue and exempting sole proprietors and non corporate general partnerships. Tobacco taxes would be raised by $1 per pack. Anti-fraud measures would be introduced to boost state tax collections. All this and more would allow the school district property tax to be capped at no more than $1.30 per $100 valuation in the 2007 tax year.

The governor said, "What this commission has proposed is fair, it's forward looking, its future oriented, it creates a tax structure for the 21st century."

But not everyone likes it. The Texas Medical Association opposes the taxation of most physician partnerships, which pay little or no taxes now. The TMA claims there's no real accurate way to determine how much tax a physician should pay on life or death medical decisions. Perry is concerned enough about the doctors' opposition that he called for a special meeting on Friday to straighten the matter out. He's hopeful consideration will be given to the charity care many doctors provide.

Another group subject to taxation are very large law firms. Darren Bertin is an attorney who probably won't be affected by a tax, but believes lawyers should step up to the plate for education. "I'm for whatever lawyers can do to help education." The State Bar of Texas has stopped short of opposing the plan. Bertin explained, "There's a lot of concern about repercussions. I've talked to a lot of attorneys and about the only ones against it are those from the large corporate firms of Houston, Dallas and San Antonio".

It's the desire of Democrat John Sharp and the Governor that no one will have enough political clout to knock down a plan they say will be answer to school finance. The legislature will convene April 17th for a special session. It will be the fifth time in three years state lawmakers have tried to fix the school funding problem.