A Letter from Governor Perry and Speaker Tom
Craddick
Dear Friend:
On Monday night, the Texas House passed legislation
to implement the largest
property tax cut in state history, while improving the state's outdated
franchise tax system. This vote was taken in response to a Texas Supreme Court
order to lower the state's reliance on local property taxes to fund public
schools.
Unfortunately, erroneous information has made its way
among political circles,
arguing that legislators have passed a business income tax and only a temporary
property tax reduction. As proud Texas leaders, focused on improving our state's
economy, we can assure you nothing could be further from the truth.
The reforms recently passed by the House have been
endorsed by many state
leaders, and business and civic associations. As a package, the proposal is
a
net tax cut that provides changes to move Texas' tax system in the right
direction.
The legislation cuts business tax rates from 4.5 percent
to 1 percent or less,
making the tax system lower, flatter and fairer for all employers. For the
first
time, businesses will have a choice of deducting labor or costs of goods sold
as
part of their tax calculations. All sole proprietors and small businesses
earning less than $300,000 will be exempt from business taxes, and most
importantly all new state revenue raised as a result of these bills will be
dedicated toward further reducing property taxes in the future, keeping a
downward pressure on property tax rates.
This legislation will also improve Texas' economy by:
•Significantly decreasing the property tax burden
and raising the after-tax
income for Texas families, helping increase family net worth;
•Lowering the costs of locating offices or plants in Texas, increasing
the
demand for Texas real estate and business location; and,
•Reducing the demand for government social welfare programs, thanks
to improved
economic performance and lower unemployment.
By passing this plan, we allow our public schools to
open this fall, provide
sustained property tax relief for taxpayers, and supply a stable source of
revenue for schools in the years to come. The alternative - using the surplus
to
buy down property taxes - only offers temporary relief, forcing the Legislature
to come back in 2007 to deal with this issue again.
Please support the Legislature in finally fixing the
problem. We appreciate your
help.
Sincerely,
Governor Rick Perry and Speaker Tom Craddick
