Speaker urges cuts in spending, property taxes
By DAVID LOWE Staff Writer

PHOTO BY DAVID LOWE Michael Quinn Sullivan, center, president of the free-market public policy organization Empower Texans, speaks with Charles Allison, left, and Harvey Farish at a recent Lampasas County Conservative Club event. Sullivan discussed the state's new gross margins tax and prospects for property tax reductions.

T ax reform is within reach, Michael Quinn Sullivan told the

Lampasas County Conservative Club at its recent meeting.

Sullivan, president and chief executive officer of Empower Texans and its project Texans for Fiscal Responsibility, said he believes the number of true conservatives serving in the Texas Legislature will increase after fall elections. With greater free-market influence in government, Sullivan believes Texans can begin reducing their tax burden, particularly by cutting property taxes.

Texas has the seventh-highest property taxes of the 50 states, he said, and landowners' property tax burden doubles every seven-and-a-half years, he added.

"We're not a low tax state," Sullivan said. "That's what I fear with Texas. We comfort ourselves with the fact that we're a low tax state, but really we're just lower than other states."

Texans could, however, enjoy a significant reduction in their property tax levies if the legislature in its 2009 session decides to expand the state sales tax and use Texas' $15 billion surplus to abolish the school maintenance and operations tax. That levy accounts for about two-thirds of school taxes, Sullivan said.

Legislators also would need to limit increases in state spending to the rate of inflation plus population increase, he said.

Over a 35-year period, a property owner's tax payments almost equal the purchase price of the property, Sullivan said. As a result, those who buy do not enjoy complete freedom with their property, he said.

"We don't own our property," Sullivan said of the effect of taxation. "We just rent it from the government. If you don't believe me, try not paying your taxes and see if the sheriff comes to talk to you."

High property taxes also discourage manufacturing, which Sullivan said needs to grow for the economy to thrive.

"Economies just can't survive without capital-intensive industry," he said.

Texas' new gross margins tax, passed in 2006, also has hurt small businesses and their customers, Sullivan said. A post on the Empower Texans Web site, www.empowertexans.com, mentions a National Federation of Independent Business-Texas survey that finds franchise taxes doubled this year for 84 percent of the state's small businesses. In addition, 40 percent of small businesses will pay taxes 500 percent higher than under the previous franchise tax.

Although referred to as a "business tax," the gross margins tax actually taxes people, Sullivan said, as customers pay higher prices and those seeking employment find fewer jobs created.

Nevertheless, Texas added about 265,000 private-sector jobs in the last year, accounting for 90 percent of the United States' private-sector job growth in that period.

Partly because business owners face dramatic tax increases from the gross margins levy, the Empower Texans CEO described himself as "irrationally positive" about the prospect of electing additional conservatives to the legislature in the fall. Small business owners, Sullivan said, are energized to vote for candidates who have promised to work toward repeal of the new franchise tax.

Strong conservatives can claim about 25 seats in upcoming elections, Sullivan predicted, adding that the more conservative Republican candidate won in almost every contested March primary.

Conservatives may claim victory even in traditional Democratic strongholds, he added.

"I think you could have three conservatives elected from Corpus Christi this fall, and that is landscape-changing in Austin," he said.

Sullivan also noted the District 78 House of Representatives race near El Paso, where challenger Dee Margo defeated Pat Haggerty, whom Sullivan described as a liberal Republican, 57 percent to 43 percent. Margo campaigned on conservative principles rather than relying on personal attacks, Sullivan said.

"I think that is a trend we saw mirrored in race after race," the speaker said of March primaries. "When [conservatives] talk about issues, we win."

Along with electing conservatives and pushing for tax cuts, free-market advocates need to insist on state spending cuts, Sullivan said.

Texas government has grown 500 percent since 1978, he said, while personal income has increased just 400 percent in the last 30 years.

With the addition of the "hidden costs" of regulations and business taxes, national, state and local governments together take half of Americans' income, Sullivan said.

When the 13 American colonies declared independence from Britain, the "tyrannical" taxation they opposed equalled about a 5 percent levy on colonists' total income, he said.

Citizens bear the blame for spending increases and the resulting rise in taxes, Sullivan said. The gross margins tax, for example, provided a response to the 35 percent increase in state spending from 2005 to the present, he said.

"The spending [governments] do is spending we ask for, for the most part. We say, 'Cut my taxes, but spend a lot of money on me.' "

The speaker said support for spending limits on the state government is growing, however. In the March 4 Republican primary election, 92 percent of voters supported Ballot Initiative No. 3, which would require voter approval for state spending to increase faster than the rate of inflation plus population increase.

Urging his audience to work toward limited government, Sullivan quoted Thomas Jefferson.

"A government large enough to give you everything you want," the country's third president said, "is large enough to take away everything you have."