海角大神

It鈥檚 not often that Republicans in Texas seek to emulate California. But then it鈥檚 not often that Republicans in Texas advocate for a tax increase.

That is exactly what the state鈥檚 GOP leaders are doing this week: calling for legislators to support a sales tax increase that would help fund a decrease in property taxes. It comes after years of mounting pressure from voters to both increase state funding to public schools and lower property taxes, which provide the bulk of public education funding in Texas. The proposed 鈥渢ax swap鈥� solution has sparked a wider debate around Republican values and how to best exercise the fiscal conservatism Republicans have, for decades, heralded as the key to prosperity.

No state has embodied that fiscally conservative ideal as much as Texas, but as legislators here try, again, to reconcile the demand for increased education spending with the demand for property tax relief, the so-called 鈥淭exas model鈥� of low taxes and small government is being tested like never before.

While the state is far from an economic crisis, some see the current stand-off as evidence that the Texas model has run its course and that more state investment in public services is needed. For some conservatives, the stand-off shows the need for a stronger commitment to fiscally conservative principles, lest Texas join Kansas, Louisiana and other conservative states that saw tax cuts backfire, leading to Democratic takeovers and tax increases.

Politically, with Texas Republicans likely to face both primary challenges from the right and a motivated Democratic turnout in upcoming elections, the consequences could be significant.

鈥淩epublicans govern on these big bright lines, and if you cross it you鈥檙e going to run afoul of many in the party who see tax increases as abhorrent regardless of how they come around,鈥� says Brandon Rottinghaus, a political scientist at the University of Houston.

Texas 鈥渋s in better shape than other [conservative] states have been that have been forced to raise taxes,鈥� he adds. But it also has 鈥渟o many ways to limit how they raise and spend revenue that it鈥檚 very hard to increase it when they need to. [And] that鈥檚 been a problem for Texas government for a long time.鈥�

鈥楾exans are sick of small ball鈥�

The Texas legislature is considering two bills that would increase the state sales tax by 1 percentage point, with the resulting 7.25% rate equaling California鈥檚 as the highest state sales tax in the country and raising about $5 billion to lower property taxes. 聽have higher property taxes than Texas.

In a joint press conference Friday with Gov. Greg Abbott and Lt. Gov. Dan Patrick, Dennis Bonnen, the Republican speaker of the House, said that 鈥淭exans are sick of small ball.鈥�

鈥淭exans want to open up a property tax bill and see that it is lower and not have to squint to notice,鈥� .

This is the last week in which the state House can pass bills, but at the moment, neither looks likely to pass. Most Democrats in the legislature are opposing the tax increase, a situation 鈥渨hich has left many of us feeling like hell has actually frozen over,鈥� said state Rep. Donna Howard, an Austin Democrat, in a press conference this morning.

In particular, Democrats say moving the tax burden from property to sales would have a disproportionate impact on lower income Texans, a so-called 鈥渞egressive鈥� tax. Under one of the tax swap bills, Texans earning less than $100,000 a year would pay more than they do now,while those earning more than $100,000 would pay less, according to 聽by the state鈥檚 legislative budget board. (Some Republicans that analysis.)

Another concern is that sales taxes are volatile, tied to consumer spending that can fluctuate year over year.

鈥淚t鈥檚 not a reliable source of revenue for funding public education,鈥� says Dick Lavine, a senior fiscal analyst at the Austin-based Center for Public Policy Priorities. 鈥淭hose kids are going to be there every single year, and there鈥檚 always more of them than in the year past.鈥�

Property taxes provide about half the funding for Texas public schools, a share that has been growing as direct state investment . That imbalance is at the root of the school finance and property tax reform debates here, but that low state investment is not just limited to public education, according to Mr. Lavine. Spending has also declined, along with spending on 听补苍诲 .

鈥淎t some point Texas is going to have to meet the needs of its people in the 21st century,鈥� says Mr. Lavine. 鈥淎t some point you can鈥檛 go on claiming your success is based on low taxes and low services. That time has passed.鈥�

鈥楧ifficult decisions to make later鈥�

Republicans coming out against the tax swap proposal are doing so for much different reasons.

Not only is voting for any kind of tax increase politically risky for Republicans, but some believe 鈥測ou don鈥檛 need to raise taxes to lower others,鈥� says Professor Rottinghaus.

State Sen. Paul Bettencourt, a Houston Republican, is one of them. 鈥淚t doesn鈥檛 matter if it鈥檚 income tax, property tax, sales tax, or whatever tax, I鈥檓 not voting for an increase,鈥� he told .

He is also skeptical because tax swaps have not often worked. In 2006, the Texas legislature reduced property taxes by increasing some taxes on businesses. While there was some short-term relief, property taxes increased again soon after. New Jersey and Connecticut also both approved sales tax swaps, but neither could sustain the savings for more than a few years.

鈥淚t鈥檚 just very difficult to do a state-for-local tax swap without having winners and losers,鈥� says Jared Walczak, a senior policy analyst at the Tax Foundation.

Some conservative groups say the current stand-off over how to offset lower property taxes is a result of the state government progressively spending outside its means, a leftward trend that needs correcting. If Texas kept its spending in line with population growth and inflation, billions of dollars would be freed up that could be used to lower property taxes without an offsetting tax increase, the Texas Public Policy Foundation (TPPF).

Furthermore, reining in spending would help Texas avoid the backlash experienced in Kansas and Louisiana. Both states made dramatic tax cuts that later proved unpopular, leading to electoral defeats and tax increases. While those states didn鈥檛 pair their tax cuts with an offsetting tax increase, the lack of 鈥渇iscal restraint鈥� concerns Vance Ginn, senior economist at the TPPF.

鈥淲e would have to come back and raise taxes or cut spending,鈥� he adds. 鈥淭here would be more difficult decisions to be made later if fiscal restraint isn鈥檛 practiced today.鈥�