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Wednesday, April 8, 2015

Bonnen Unveils $4.87 Billion Tax Cut Plan

Insider's Report Vol. 10 No. 19

Today I unveiled a sweeping tax relief plan that will provide nearly $5 billion in permanent tax relief for every individual and business in Texas.

It is the biggest, broadest and boldest tax relief plan of the legislative session.  It provides lasting tax relief to every family and business, and it is fiscally responsible because it abides by the spending cap.  Most importantly, this tax relief is permanent.  It cannot be eroded by local tax hikes or rising appraisals.  In fact, the only way these tax cuts can disappear is by a vote of the Texas legislature.

House Bill 31 offers the first state sales tax cut in Texas history, reducing the rate from 6.25% to 5.95%.  The average family of four will save $172 per year.  Employers, which currently pay 40% of all sales taxes collected in Texas, will realize substantial savings as well.   

This is tangible tax relief that will benefit families and businesses of all sizes every time they buy something.   Texans won’t have to take the Legislature's word for it that we cut their taxes.  They will see it on every receipt.

House Bill 32 cuts the franchise tax rate by 25% across-the-board for all businesses. Retailers and wholesalers will pay 0.375%, and all other businesses will pay 0.75%. The bill retains current exemptions that allow 900,000 small businesses to pay no franchise tax.   

While the state controls the franchise tax and the sales tax, it does not control property taxes.  If our experience in recent years has taught us anything, it’s that property tax cuts are quickly swallowed by local rate hikes and rising appraisals.  Any property tax cut passed without major systemic reform is guaranteed to meet the same fate.  Taxpayers won’t get the relief they were promised, we’ll see no real economic benefit, and Texas will have abandoned one of the bedrock principles of fiscal responsibility by busting the spending cap.

My tax relief plan in the Texas House is the only one that has widespread support from business groups that represent a broad spectrum of the economy, and it is the only one that will put more money into the hands of taxpayers, stimulate the economy and limit the size of government.