undergroundrr
08-30-2011, 02:48 PM
How pro-business is this? Note how much more fiscally conservative Democrat Bob Bullock was than Perry.
This is from the newsletter of the Texas Association of Broadcasters that came out today -
Court to decide if Texas has an income tax
The Supreme Court of Texas will begin deliberating in October on whether Gov. Rick Perry and state lawmakers adopted an unconstitutional state income tax when they revised the state’s franchise tax in 2006.
Perry and legislators have argued the tax – often called a “modified gross receipts tax” or “margins tax” – does not
constitute an income tax.
The distinction matters because the Texas Constitution requires voters to approve an income tax under an amendment recommended by then-Lt. Governor Bob Bullock and adopted by voters in 1993.
The court’s coming deliberations stem from a lawsuit filed in July by Allcat Claims Service, L.P., before Perry declared he was running for President.
The company contends:
• The franchise tax is an income tax, effectively taxing a natural person’s share of partnership income, and was
enacted by the legislature without following the voter-approval provision of the Bullock amendment.
• The franchise tax violates the equal and uniform provision of the Texas Constitution because Allcat, an insurance
claims adjuster, is not allowed to exclude payments to independent contractors from their total revenue while
similarly-situated businesses, such as general contractors, can.
In the filing, Allcat is asking the court to rule the tax unconstitutional and enjoin the Comptroller of Public Accounts from collecting the tax which generates about $4 billion annually.
Perry pushed the modified gross receipts tax through a special session of the Texas Legislature, promising the measure would raise enough money to offset reductions in local school property taxes.
Instead, the actual property tax relief was far less than promised, and the newly-revised franchise tax generated far less revenue than Perry and lawmakers expected.
The failure of this tax swap has exacerbated the state’s structural deficit whereby lawmakers are increasingly borrowing money for basic government functions, accelerating tax collections from future budget years and booking expenses from one budget cycle in a later budget cycle.
The latter two so-called “smoke and mirrors” maneuvers totaled $11 billion in the new budget cycle which runs from Sept.
1, 2011, through Aug. 31, 2013.
And it gets worse – lawmakers adopted only a partial spending plan for the new budget cycle, keeping off the books about $5 billion in expenses they know they will have to pay so they could avoid using the state’s $6 billion Rainy Day Fund until after the next general election in November 2012.
Straight to the top – better odds?
The original legislation creating the modified gross receipts tax gave the Supreme Court exclusive jurisdiction over
constitutional challenges to the tax and allowed only 120 days for the Court to rule.
In addition to asking the plaintiff and the state to address whether the tax runs afoul of the Bullock Amendment, the court asked the parties to weigh in on whether the Supreme Court should have original jurisdiction in the case.
Most Capitol observers expect the all-Republican court to rule against the plaintiff based on the politics alone; most were originally appointed by Perry and will be reluctant to issue a ruling that will hamper Perry’s presidential election prospects.
Based on the court’s orders to the parties, oral arguments are expected to be held during the week of Oct. 24-28.
This is from the newsletter of the Texas Association of Broadcasters that came out today -
Court to decide if Texas has an income tax
The Supreme Court of Texas will begin deliberating in October on whether Gov. Rick Perry and state lawmakers adopted an unconstitutional state income tax when they revised the state’s franchise tax in 2006.
Perry and legislators have argued the tax – often called a “modified gross receipts tax” or “margins tax” – does not
constitute an income tax.
The distinction matters because the Texas Constitution requires voters to approve an income tax under an amendment recommended by then-Lt. Governor Bob Bullock and adopted by voters in 1993.
The court’s coming deliberations stem from a lawsuit filed in July by Allcat Claims Service, L.P., before Perry declared he was running for President.
The company contends:
• The franchise tax is an income tax, effectively taxing a natural person’s share of partnership income, and was
enacted by the legislature without following the voter-approval provision of the Bullock amendment.
• The franchise tax violates the equal and uniform provision of the Texas Constitution because Allcat, an insurance
claims adjuster, is not allowed to exclude payments to independent contractors from their total revenue while
similarly-situated businesses, such as general contractors, can.
In the filing, Allcat is asking the court to rule the tax unconstitutional and enjoin the Comptroller of Public Accounts from collecting the tax which generates about $4 billion annually.
Perry pushed the modified gross receipts tax through a special session of the Texas Legislature, promising the measure would raise enough money to offset reductions in local school property taxes.
Instead, the actual property tax relief was far less than promised, and the newly-revised franchise tax generated far less revenue than Perry and lawmakers expected.
The failure of this tax swap has exacerbated the state’s structural deficit whereby lawmakers are increasingly borrowing money for basic government functions, accelerating tax collections from future budget years and booking expenses from one budget cycle in a later budget cycle.
The latter two so-called “smoke and mirrors” maneuvers totaled $11 billion in the new budget cycle which runs from Sept.
1, 2011, through Aug. 31, 2013.
And it gets worse – lawmakers adopted only a partial spending plan for the new budget cycle, keeping off the books about $5 billion in expenses they know they will have to pay so they could avoid using the state’s $6 billion Rainy Day Fund until after the next general election in November 2012.
Straight to the top – better odds?
The original legislation creating the modified gross receipts tax gave the Supreme Court exclusive jurisdiction over
constitutional challenges to the tax and allowed only 120 days for the Court to rule.
In addition to asking the plaintiff and the state to address whether the tax runs afoul of the Bullock Amendment, the court asked the parties to weigh in on whether the Supreme Court should have original jurisdiction in the case.
Most Capitol observers expect the all-Republican court to rule against the plaintiff based on the politics alone; most were originally appointed by Perry and will be reluctant to issue a ruling that will hamper Perry’s presidential election prospects.
Based on the court’s orders to the parties, oral arguments are expected to be held during the week of Oct. 24-28.