Texas And Taxes: Time To Set The Record Straight
Texas Gov. Rick Perry released an ad (paid for by TexasOne, a public-private partnership aimed at economic development outreach) in Missouri touting Texas’ business-friendly climate and criticizing Missouri Gov. Jay Nixon for vetoing a tax cut. In some quarters, this has not been well received. Missouri Secretary of State Jason Kander criticized Perry for trying to entice Missouri companies to move to Texas. However, if all Missouri can do to respond to Texas is write strongly worded letters, then we’ve already lost the economic development battle. It is time for real reform, and mirroring Texas isn’t a bad way to go about it.
It’s true that Texas faced a serious budget shortfall after a recession hit. So did many states. However, Texas has managed to climb out of the hole it was in. Now, according to the Texas comptroller, Texas is looking at an $8.8 billion surplus. Even after making up for much of the cuts imposed by earlier budgets, Texas is still looking at a surplus. Texas also has significant assets in its “Rainy Day” fund. According to the Tax Foundation, Texas’ “Rainy Day” fund is 18.58 percent of general spending compared to 3.28 percent for Missouri.
Nixon and liberal advocacy groups such as the Missouri Budget Project worry about effects an income tax cut will have on education. Yet Texas, without an income tax, performs just as well as Missouri on a variety of education metrics.
Income taxes are among the most economically damaging taxes a state can impose. The Show-Me Institute has published research on how Missouri could eliminate the state income tax, or for the less bold, eliminate just the corporate income tax. Maybe instead of letters, Missouri can try real reform.