As the public school finance battle rages on, some Texas lawmakers are wary of using a potential sales tax increase to generate revenue for a system that depends heavily on property taxes.
Two weeks ago, the U.S. House passed a bill called the American Jobs Creation Act, part of which allows states without a state income tax to deduct sales tax from federal income tax for two years. The portion of the bill addressing the sales tax, proposed by U.S. Rep. Kevin Brady, R-The Woodlands, has been championed as an economic booster.
The deduction, if it becomes law, could make a sales tax increase more "palatable," said Ky Ash, a spokesman for state Rep. Jim Keffer, R-Eastland. Keffer would support a "small" increase in the sales tax to fund public schools, Ash said.
State Sen. Gonzalo Barrientos, D-Austin, does not believe that increasing the sales tax would solve the public school finance dilemma.
"It has less of an impact than most people believe," said Ryan Duran, a spokesman for Barrientos. "It doesn't necessarily translate into a benefit to middle- and lower-class Texans who don't itemize. When or if it's passed, and we're still here discussing public school finance, it may show up as a red herring that it's OK to hike up sales tax."
State Sen. Eliot Shapleigh, D-El Paso, has said the tax would not be a fair method of raising revenue, even with the federal income tax deductible. The deduction is only for those who itemize their federal income tax returns for big ticket items, making a sales tax increase a burden on middle- and lower-class families who do not itemize, Shapleigh wrote in a letter to the chairman of the joint committee on public school finance.
"Using the sales tax to lower property taxes does not provide the relief that Texans need," Shapleigh said in the letter. "Middle-income Texas families already pay more in sales taxes than property taxes."
Regardless of whether the Legislature raises sales taxes to fund school finance, the potential deduction can mean only good things for Texas, said Sen. Steve Ogden, R-Bryan, chairman of the Joint Committee on Public School Finance. "We're excited about it. We think it's a good thing," said Ogden spokeswoman Mary Jo Hurley. "When we're talking about school finance ... it actually gives us more degrees of freedom at the state level, and we like that."
James LeBas, chief revenue estimator at the state comptroller's office, said the deduction itself would keep $700 million in Texans' pockets and stimulate the creation of 16,000 jobs.
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