Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

FairTax at State Level

There is no reason why the FairTax can't work at the state level. I know there have been some discussions in the legislature in the past, but to no avail. Since the lege is now in session, please consider contacting your state rep and state senator about replacing property taxes with the FairTax.

If we can get the FairTax instituted at the state level, it can serve as test for the FairTax on the national level. Unfortunately, my state rep and state senator are both opposed (they are Democrats).

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Permalink Reply by Peter D. on January 28, 2009 at 9:20am

This is a good idea. My question would be if the FairTax has been studied at the State Level. With all the oppressive Federal taxes, would the equation work out the same if it were instituted at a State level?

I would guess this would require the removal of all other State taxes. Being new to Texas I'm not aware of what those might be, since there is no Income tax....

Anyone want to educate us?

Thanks!

Permalink Reply by Pat Conroy on January 28, 2009 at 11:15am

There are three main sources of revenue for state and local governments in Texas:

- Sales tax (6% for the state and up to 2.25% for local entities)
- Property taxes
- Margin tax on businesses (similar to a gross receipts tax)

Money also comes in from oil/gas royalties (mostly goes to UT and A&M systems) and, of course, the sin taxes (alcohol, tobacco, etc.); but sales and property taxes make up the major part of the state's revenues. I'm just going by memory, so some of my numbers are probably off.

There was a state FairTax study done in 2004 by the Texas Public Policy Foundation that determined that the sales tax would have to be raised to around 11% to institute a Texas FairTax (including a prebate). I don't think anything was ever proposed in the legislature.

Permalink Reply by Peter D. on January 28, 2009 at 2:11pm

Thanks for the follow-up on this. I thought property taxes were a county-level tax?

Permalink Reply by Pat Conroy on January 28, 2009 at 4:54pm

There are property taxes for county, city, school district, hospital district, library district, fire district, and water district in my case -- there may be others. That's why I said revenue for state and local governments. By far the biggest property tax is for schools (about 70% in my case). School funding in Texas is very complicated. We call it Robin Hood.

The 11% rate in the study included eliminating school district property taxes (I think), but I'm not sure if it included eliminating other local property taxes.

Permalink Reply by John Shuey on January 28, 2009 at 5:46pm

The 11% figure had to be with the tax only on items presently taxed. If it is written similar to HR25 it would remain at the same rate as now and replace all but the O&G monies and the gasoline and sin taxes.

Permalink Reply by Pat Conroy on January 28, 2009 at 6:15pm

The report is here:

>http://www.texaspolicy.com/pdf/2005-01-fair.pdf

The various scenarios are on page 22. The 11% (actually 10.91%) is based on eliminating all school property taxes and providing a prebate. It also assumes a tax base similar to what is proposed in the national FairTax.

Permalink Reply by Marv Kuhn on January 28, 2009 at 8:27pm

Texas Sales Tax Update:

On Dec. 15, 2008, Dr. Karen Walby, FairTax Economist from Florida, various State Representatives, aides, and Senator Dan Patrick met with me to discuss the feasibility of a Texas state sales tax (FairTax).

They all know its benefits and potential, and "will consider", (ie., typical political rhetoric).

This cost me a pretty penny, so I will continue to dog the effort. Thanks to others who are trying also.

Permalink Reply by Pat Conroy on January 29, 2009 at 9:25am

Marv,

I'm looking for a state rep or even an legislative assistant to speak to our local CEO roundtable about the FairTax (state or national). Was there anyone at your meeting whom I might contact that would fit the bill?

Permalink Reply by Peter D. on January 29, 2009 at 11:38am

Yeah...they "will consider" it alright...

I think the only people I've heard anything negative about the FairTax from are politicians or people who currently pay no taxes anyway...

The politicians I can understand. We are, after all, attempting to wrench power from them and put it back in the hands of We the People.