This week in the Legislature…
It’s amazing to consider that the biggest “showdown” that we may have in the Legislature this year is not whether we are going to cut taxes, but what type of taxes we are going to cut. Currently, the proposed House plan focuses on cutting sales taxes and business franchise taxes, while the Senate plan focuses on property taxes and the franchise tax.
While we should look at all possibilities regarding where to cut taxes, it is important that we choose the right one(s) and the right amount. My problem with cutting property taxes is that this is not truly a state tax, but rather is a local tax. We should focus first on taxes where the state is the one who receives the revenue. While there are no doubt local governments that are taxing their constituents too heavily, I think this should be addressed with specific legislation, not statewide edicts. Finally, if the state is going to “hold the local entities harmless” by making up for our statewide tax cuts, then we have really done nothing to decrease the size of government.
The business franchise tax, on the other hand, seems like an excellent place to focus our time and attention. It is revenue that comes to the state (and therefore should be dealt with by state legislators), and it is universally panned as an “income tax” on business, regardless of whether they have any income. It has also been listed by the House, the Senate and the Governor’s office as a tax that needs reduction, modification or elimination. I would caution that any decrease in the franchise tax must be across the board, so that we keep this tax as broad and low as possible.