Just like Captain Renault in Casablanca, Legislators were shocked, shocked to see the new margins tax show up in 2007. Confused Sprint customers received their bills which listed the new tax, and many were asking questions. In a report on Dallas’
WFAA, my own State Representative Jim Jackson, looking befuddled and bemused, told the reporter that he didn’t know how such a thing could have happened. As one of Representative Jackson’s constituents, my husband and I have been watching for our property tax reduction. We aren’t holding our breath.
Evidently, Sprint has decided that because of the looming tax bill imposed upon it by the Texas legislators, they need to start collecting the tax right away. Other businesses are no doubt considering the same thing. After all, they will owe the tax whether they make a profit or not. This environment of uncertainty is not good for business.
According to The Tax Foundation, one of the unintended consequences of gross receipts margins taxes is that companies in the same industry can experience vastly different tax rates. On the web site, www.taxfoundation.org, it says, “lawmakers are under constant pressure to levy different rates for different companies because of a lack of horizontal equity inherent in gross receipts taxes.” In Washington there are six different rates which vary by industry. In Kentucky, legislators are under pressure to lower the margins tax on retailers, who have been hit particularly hard by the year-old margins tax. Lobbyists will likely descend upon Austin to attempt to secure a preferential tax rate for their particular client. This new tax will cause nothing but headaches for businesses and higher prices for consumers. And Republicans wonder why our majority is shrinking.
Still, many Texans are unaware of the consequences of the gross receipts margins tax. When disgruntled business owners and customers to whom these taxes are passed on begin to experience the full impact of the new tax, it could get ugly. For those activists who worked to stop this punitive business tax during the last legislative session, and for the legislators who voted “No” on this tax bill, we have just one thing to say to our state senators and representatives who thought that this was a good idea: “Can you hear us now?”