NCPA - National Center for Policy Analysis

DEEP IN THE HEART OF TAXES

May 10, 2005

For almost a decade Texas has been grappling with court orders to provide "equitable" financing for the state's school system. The Republican-controlled legislature has now interpreted this to mean that the entire tax system in Texas has to be scrapped to raise more money, putting Texas's status as one of only nine states without an income tax is in serious peril. Both the state Senate and House have endorsed what Republican Lieutenant Governor David Dewhurst is calling a "wage tax."

A wage tax is of course a fancy disguise for a personal income tax, and imposing one is a sure way to put a state on the path to slower growth, says the Wall Street Journal:

  • Since 1990 the nine states without income taxes have enjoyed twice the rate of job growth and 2.5 times the population growth of the highest income tax states.
  • Capital, jobs and economic development in America are migrating from high-tax states to low, and from blue states to red.
  • Why would fast-growing Texas want to imitate New York and Massachusetts?

In Texas and other states under court orders, "equity" has become a code word for Robin Hood financing schemes that redistribute school cash. This has reduced the authority of local school districts and parents, while empowering state-run education departments and teachers unions with a stranglehold on the schools.

In 2002 Texas voters gave Republicans control of the Legislature for the first time in 100 years on a pledge to keep government spending under control and maintain a pro-growth tax system. The Dewhurst plan violates both of those conservative governing principles and is the surest way to get the GOP thrown out of office, says the Journal.

Source: Editorial, "Deep in the Heart of Taxes," Wall Street Journal, May 10, 2005.

For text (subscription required):

http://online.wsj.com/article/0,,SB111568088639628653,00.html

 

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