Texas must work to keep its lead

Published 7:43 pm Tuesday, January 27, 2015

The real danger to our state’s economic standing is a combination of competition — other states are catching on — and complacency in Austin. Recently, South Carolina’s Gov. Nikki Haley announced some measures that would bring her state in line with the “Texas Model.” South Carolina, like a number of other states implementing economic reforms, could soon be more Texan than Texas.

Gov. Haley wants to dramatically cut the state’s individual income tax, while hiking the gas tax enough to repair the state’s infrastructure. Both moves could lure businesses to the Palmetto State.

“The Republican governor has repeatedly vowed to veto any gas tax increase and repeated that promise in her speech, if the bill that comes to her is a stand-alone tax proposal,” the GreenvilleNews reported last week. “But she said she will approve of a tax increase of 10 cents per gallon over three years if the Legislature first restructures the state Department of Transportation to get rid of the legislatively elected board and also reduces the state’s income tax rate from 7 percent to 5 percent.”

The net tax cut could bring her state more in line with the Texas Model.

“She said reducing the state’s income tax would make South Carolina competitive, ‘a massive draw for jobs and investment to our state,'” the News added. “Lawmakers applauded the proposal.”

This comes as other states, including New York and California, are making similar moves. New York, for example, is continuing its “The New New York” ad campaign, which touts the state’s “new” approach to business.

“Some said we lost our edge,” actor Robert De Niro says in one ad. “Well today, there’s a new New York State, one that’s working to attract businesses and create jobs.”

The campaign includes “Startup NY,” a program to help people who want to start a new business.

“Now, businesses can operate 100 percent tax-free for 10 years,” the state says. “No income tax, business, corporate, state or local taxes, sales and property taxes, or franchise fees.”

California, for its part, took the loss of Toyota to Texas in 2014 very seriously, and responded with reforms to make the state more business-friendly.

These states are only part of the threat to Texas. The other part is complacency.

Take the state’s flawed franchise tax. The franchise or “margins” tax is poorly designed and is acting as a drag on our state’s economy. It was adopted in 2006 in an effort to cut property taxes — the hope was to give some relief to homeowners. But few homeowners actually saw the full one-third property tax cut they were promised, and the franchise tax proved to be disappointing.

When asked on the March 2014 primary ballot if the tax should be abolished, an amazing 90 percent of GOP voters said yes.

Of course, abolishing the tax altogether would mean lawmakers would have to find the money elsewhere.

We Texans love to compare our state with others. It’s going to take political courage in Austin for us to keep those bragging rights.