A lesson in math for Rep. Hilderbran
April 08, 2013, 9:00 pm by Roy E. Bode
Until last week, Harvey Hilderbran had not given his constituents much reason to believe that he was particularly dull-witted, perhaps because that deficiency is so unremarkable in Texas politics.
But unfortunately he has now lifted his snout above the Legislative herd to whine that he’d "love to do a phase out” of the most reprehensible state business tax ever invented, but just can’t figure out how.
"What the Legislature needs is the specific numbers to add up,” he said when asked about a study by the National Federation of Business Research Foundation that concluded the tax is a job killer – as anyone in small business knows.
Young children are taught to subtract as well as to add in Texas schools.
It’s a skill Hilderbran ought to learn as well.
But even if the chairman of the state House Ways and Means Committee thinks there’s not enough wasteful spending in Our Great State Government to offset loss of the so-called "margins tax,” it is inexcusable to persist with a tax that is not only grossly unfair and destructive but also has never produced the revenue its shills promised.
The enormous injustice of the "margin” – or franchise tax as it is also known – is that it is calculated on gross revenue, not net profit.
Businesses are expected to pay the same amount of tax whether they make $100,000 or lose $100,000. Any profits may be confiscated by the state. And it takes a bigger bite out of struggling businesses than prosperous ones.
That means when Mom and Pop lose money in "business friendly” Texas, they don’t owe the feds a dime, but the state is there to take their last penny, even if it pushes them into bankruptcy.
Of course, it clearly means the federal government is more small business friendly than the State of Texas when it comes to taxes, despite what the coyote killer himself, Gov. Rick Perry, claims.
For those with a short memory, Perry was a member of the coven that brewed up the margin tax in 2006 and sold it as a means of cutting property taxes and distributing the state tax burden more fairly and effectively.
Property tax decreases are still as rare as Jackalopes but small business owners have seen their state tax bill sail into the stratosphere. One woman in Amarillo told NFIB researchers that hers ranged from $500 to $2,000 before Perry spawned this abomination but six years later had shot to nearly $60,000.
Even a lower primate should be able to figure this out: When business people see that kind of tax increase, they defer or cancel hiring, expansion and capital spending, they cut payrolls, they slash expenses, they risk losing customers by trying to pass along the cost, and they’re lucky if they survive.
It is a dream-killer that’s especially punishing to those starting a business of their own or trying to turn around one that’s failing.
"When a small business is unprofitable and must pay the tax, they use their personal savings, mortgage their home or borrow money from their family to meet their obligation,” Will Newton, NFIB’s Texas Executive Director, said last week.
How business friendly is that?
Insincere commiseration and vague promises of future relief when things aren’t as tough for state budget makers has become a ritual of every Legislature for the past few years.
Thanks to the Internet, it’s hard for politicians to bury past words and deeds very deeply. Saddle up a search engine and you’ll find the Republican chairman of the Senate Finance committee declaring in the last session that a margin tax change might be considered — but only after Legislators decided how much to spend.
In 2010, Gov. Perry previewed his command of a vast array of ignorance he later displayed for all the nation by denying that the franchise tax makes some businesses pay more to the State of Texas than to the U.S. government.
"I don’t know what state they’re in – they’re obviously not in Texas,” he told one of our reporters who asked if he thought that was "business friendly.”
And a couple of years ago, state Sen. Troy Fraser, a Horseshoe Bay Republican, summed up the situation pretty well when he called the tax "unfair,” said it was a "mistake” but explained that undoing it is a "problem” because government is "addicted to the money it generates.”
Yep, voters in Llano and elsewhere in Harvey Hilderbran’s district should ask him about that.
In fact, it’s time for all small business people to tell Hilderbran and other faux conservatives who quack endlessly about their devotion to Main Street – to peddle their feed lot byproduct elsewhere.
We’re tired of it. We’re bored by it. We don’t want anymore.
Business owners are too busy running in place just to survive in a country where too many politicians are full of praise for what they claim to do for us and empty of remedies for what they really do to us.
Every time Hilderbran, Perry, House Appropriations Chairman Jim Pitts and others doing nothing to rid small business of this pestilent tax set foot on a Texas Main Street, the first question they should be asked is, "Why don’t you shut up about what a great job you’re doing for small business long enough to actually do something?”
At the very least, Hilderbran and other colleagues of State Reps. Linda Harper-Brown and Ken Paxton Jr. should be rallying behind their efforts to wean the state off the tax by reducing the rate.
If Hilderbran and his ilk continue to ignore the economic vandalism this tax inflicts on small Texas businesses, it’s time to replace them with serious conservative leaders.
We need people in the Legislature who can subtract as well as add, who believe it’s important taxes be fair as well as productive, and who are smart enough to fix a bizarre monstrosity that’s fed on the Texas economy for seven years because the Republican leadership can’t find a better way to fill the state’s trough.
Roy E. Bode
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