26
Texas Association of Builders
July/August 2015
Government Relations
Long before the Governor’s declarative
assignment to the legislature, Dan Patrick
had promised Texas voters property tax
relief during his campaign for Lieutenant
Governor of Texas. Now elected and serving
as the President of the Senate, Lieutenant
Governor Patrick sat down with the Senate’s
budget writer, Senate Finance Committee
Chairwoman Jane Nelson (R-Flower
Mound), to create a tax relief plan that
concentrated on property tax relief.
The product of the Senate plan consists of
doubling the current homestead exemption
on school property tax, lowering the
franchise tax by 15%, and increasing the
small business tax exemption. (See chart
in article.) The Senate’s tax relief package
moved out of the Senate fairly quickly and
lingered in the House with no movement.
The House, on the other hand, moved at
a more deliberate pace before presenting
their tax relief plan, though the House’s
budget writer was actively working behind
the scenes to create a viable and impactful
tax relief plan for Texans. Representative
Dennis Bonnen (R-Angleton) serves as
the Chairman of the House Ways and
Means Committee which is the committee
that writes and reviews tax legislation in
the House.
The House’s much-anticipated tax relief
plan, like the Senate's, includes a franchise
tax reduction, but, unlike the Senate,
provides a sales tax cut instead of property
tax relief. If passed, it would be the first state
sales tax cut in Texas history.
Upon the House’s presentation of their tax
relief package, a debate ensued between
the GOP leaders on opposite sides of the
rotunda. Lt. Governor Patrick immediately
sent out a press statement outlining that
Competing Visions for Tax
Relief Dominate Session Agenda
D
uring the 2015 State of the State
address, Texas’ new Governor Greg
Abbott made a momentous vow to
veto the state budget if it failed to include
significant cuts to the business franchise tax
and property tax:
. . . . .
“I will reject any budget that does not
include genuine tax relief to Texas
employers and job creators. I will also
insist on property tax reduction. It’s time
for property owners – not government
– to truly own their property. My plan
calls for a $2 billion reduction in the
business franchise tax and a $2.2 billion
reduction in the property tax burden.
My budget includes an appropriation
that makes school districts whole for
any tax revenue they might lose.”
Governor Greg Abbott,
2015 State of the State Address
. . . . .
After receiving this declaration from
the Governor, the GOP leaders of both
chambers began the tax relief race to write
the most substantive tax relief plan.
By Justin MacDonald
Senate Tax Relief Plan:
$4.6 Billion in Cuts
• Increases the current homestead exemption
for the school property tax from the current
$15,000 to an indexed value equal to
25% of the statewide median home value
(an increase to approximately $31,400,
but increasing each year forward)
• Lowers the standard franchise tax
rates by 15% (to 0.425% for retailers/
wholesalers and 0.85% for all others)
• Reduces the rate of the EZ tax alternative
calculation for small businesses (a simple tax
on Texas receipts with no deductions) from
0.575% for businesses with less than $10 M
in total revenues to 0.331% for businesses
with less than $20 M in total revenues
• Exempts roughly 60,000 existing franchise
taxpayers by increasing the small
business exemption from $1 M to $4 M
PROS
• Delivers Texas homeowners lasting
meaningful property-tax relief
• Increases homestead exemption for first time
in almost 20 years – to 25% of median value
• Holds school districts harmless by
covering the cost of tax relief
• Would constitutionally ban the
establishment of any tax on real estate
sales, leases, or transfers and stop a
new tax on Texans before it starts
• Reduces the franchise tax by 15%
• Provides approximately $1.5
billion in franchise tax relief
• Removes the tax burden from
52% of businesses
• $206 savings per household in
school property taxes
