Ellis Plan to Review Tax Loopholes Passes Senate


Amendment to HB 3390 to requires Comptroller, Legislative Budget Board to review loopholes and preferences

(Austin, Texas)// Senator Rodney Ellis’ plan to identify and review Texas’ tax preferences, ensure that they are carrying out their intended purposes, and advance more efficient and effective economic policy was passed by the Texas Senate. Ellis’ plan, SB 140, was attached to HB 3390 by Senator Bob Deuell (R-Greenville), legislation to extend property tax abatement agreements.

“The Texas tax code is riddled with tax subsidies, giveaways and loopholes that were put in place years ago by special interests and have never even been reviewed,” said Ellis. “It is such a problem that, despite repeated requests to numerous agencies, no one at the state level could tell me how much we lose in tax breaks and targeted incentives because no one even knows how many are in the code, how much they cost, or if they are even working!”

The Ellis Plan will:

1. Identify Tax Preferences in Code — Require the Texas Comptroller of Public of Accounts to identify all state and local tax preferences in the Tax Code.
2. Set Schedule for Review — The Comptroller would set a schedule for all to be reviewed in next twelve years.
3. Review and Study — The Legislative Budget Board would perform reviews of those state and local tax preferences over a twelve-year period.

The Ellis amendment will help determine all of the preferential tax breaks in the Texas law. After all, state agencies are subjected to a “sunset review” every twelve years to determine if their functions need to be continued. The tax code would benefit from a similar periodic review of all its exemptions, exclusions, and special treatments to answer one simple question — are they working?

According to state reports, Texas spends $43 billion annually on these incentives, but with almost no accountability or oversight. To many Texans, these so-called incentives are simply another way to game the system. For instance, Texas gave retailers a tax break of over $200 million in 2010 simply to file their sales tax on time. Do you get a break for filing your taxes on time? There’s even a loophole that allows private country clubs to skip out on millions of dollars of property taxes. Using the loophole, the state’s largest beneficiary, River Oaks Country Club, has a market value of $79 million but is assessed at only $4 million. The 2014-15 budget even includes nearly $40 million to subsidize Hollywood movies.

The truth is, as a result of the sunset process, the legislature knows virtually everything there is to know about every penny spent by agencies such as Texas Board of Architectural Examiners, The Texas Commission on the Arts and the Windham School District with the Texas Department of Criminal Justice than we do about the Texas tax code. Furthermore, this session there are nearly 100 bills on the cusp of becoming law which mandate thorough studies of such issues as the prohibition of dairy farming in certain areas of the state, or requiring research papers to be available to the public.

Under the Ellis Plan, Texas will now do the same thing for the tax code.

“We need better accountability measures, checks, and balances on corporate welfare and tax giveaways just like every other government program to prevent wasteful spending in these tough economic times,” said Ellis. “Now we are going to have it.”


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