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TEXAS VIEW: Texans don’t like taxes - Odessa American: Texas Opinion

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TEXAS VIEW: Texans don’t like taxes

THE POINT — Cautious approach needed in changing Internet access tax.

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Posted: Sunday, August 31, 2014 5:00 am

If you’re from Texas, or just familiar, you know it has more than its share of absolutes: big, rangy spaces; hot summers; terrific food, with barbecue and Tex-Mex atop the pyramid; lots of people and growing all the time.

And low taxes. We’re famous for that one.

Don’t just believe us. Ask the Tax Foundation, which does these evaluations for a living. Texans’ state and local taxes, as a share of income, are among the four lowest in these United States. An argument for another day is whether this is entirely positive, on balance, but facts are facts.

So why in the world are Texans subject to a tax barred by law in 43 other states?

Long story short, a 1998 law in Congress blocked the collection of an Internet access tax — but grandfathered in the seven states already collecting it, Texas among them. By virtue of its size and population, Texas today collects more of this tax money than the other six states combined. Last year, that meant $358 million out of individual Texans’ pockets and into state and municipal treasuries.

How’s that for your low-tax Texas?

On Internet access charges of more than $25 a month, Texas collects a 6.25 percent sales tax; local sales tax can add 2 percent more. The state comptroller’s office estimates an average Internet bill in Texas is $60, so Texans typically pay $2 to $3 per month in tax that few other Americans face.

Texas cities worry that losing that revenue — in Dallas, it’s about $2.4 million annually — would lead to spending cuts. This is a fair concern until you consider that cities in 43 other states survive just fine without that particular sales tax.

So far, the U.S. House has passed a bill, co-sponsored by 21 of the state’s 36 reps, to renew the ban on this tax and also remove the exemption for the seven grandfathered states.

This fight does not fall neatly along party lines and, in many cases, pits federal lawmakers against state and local governments. The U.S. Senate, meanwhile, is considering extending the ban, which expires Nov. 1, but also the exemptions for Texas and the other six states.

Despite resistance from some in Congress, this issue should be combined with another fairness-in-taxation issue, a uniform method of collecting sales tax from out-of-state retailers who sell online. Currently, states can draw those taxes only from sellers with a physical presence in their borders. This was an issue in Texas when it rightly pursued online giant amazon.com for sales tax dollars.

Yes, these are distinct issues, but linking them, as a bipartisan group in Congress is attempting, could help Texas and its cities replace some undeserved sales tax revenue with money they actually should collect. Together these shifts would bring two measures of fairness to our tax system.

Dallas Morning News

Odessa, TX

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