Fireworks erupted on Wednesday in the Texas capitol building between the Lt. Governor and the House Speaker Pro Tempore over tax reform legislation. The verbal exchange between the two leaders erupted after State Representative Dennis Bonnen (R-Angleton), who also serves Chairman of the House Ways and Means Committee, unveiled his plan for a $4.9 billion tax cut.
“This is the biggest, broadest and boldest tax relief plan of the legislative session,” said Bonnen in a written statement obtained by Breitbart Texas. “It provides lasting tax relief to every family and business, and it is fiscally responsible because it abides by the spending cap.”
House Bill 31 offers the first state sales tax cut in Texas history, Bonnen wrote. It would reduce 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.
Bonnen explained this tax cut would be permanent and not subject to being taken back by local taxing authorities. He claimed this has been the case in previous property tax cuts. “This is tangible tax relief that will benefit families and businesses of all sizes every time they buy something,” he explained. “Texans won’t have to take our word for it that we cut their taxes. They will see it on every receipt.”
Lt. Governor Dan Patrick (R) responded quickly and quoted Texas Governor Greg Abbott’s remarks from his State of the State Address in February. “I will reject any budget that does not include genuine tax relief to Texas employers and job creators” Abbott stated in the address. “I will also insist on property tax reduction. It’s time for property owners – not government – to truly own their property.” Patrick criticized Bonnen’s plan because it did not include any property tax relief to homeowners. He said Bonnen’s plan was “out of step with Texans, my office, the Senate and the Governor.”
The Senate plan involves a $4.6 billion tax relief package that provides “immediate tax relief to struggling homeowners and Texas businesses.”
It appears Rep. Bonnen does not have faith in property tax cuts actually reaching Texas homeowners. “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,” he wrote in his press release. “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.”
Patrick said the Senate plan outlined in SB 1, SB 7, and SB 8, stays within current budget spending limits and, he wrote, actually comes in $1.3 billion under the cap. He wrote that the House plan for paying for tax relief is unclear.
Bonnen stated that 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.
The Senate plan exempts an additional 61,000 Texas businesses from any franchise tax burden, according to Patrick’s press release.
Representative Bonnen included a letter from the Legislative Budget Board and a chart comparing the House and Senate plans and his expectations of economic benefit to the State of Texas if the House plan is enacted. Both documents are attached below.
In response to an inquiry from Breitbart Texas, Bonnen said, “I respect the work of Lieutenant Governor Patrick and the Senate in crafting a tax cut plan. Our plan shrinks government, provides permanent tax relief, and protects the state spending cap. It is the most fiscally conservative plan on the table. That’s why it has widespread support from members of the business community.”
Patrick closed his press release with cordial comments. “The Texas Senate and I look forward to working with the House and Governor Abbott to iron out our differences in the best interest of all Texans to provide tax relief as quickly as possible.”
This article has been updated.