Co-Chairmen: Tim Dunn, Board Member, TCCRI and Representative John Otto, District 18

The school finance debate underscored the imperative for a complete overhaul of state taxation rather than simply finding new revenue sources to fund public education. The primary problem with state taxation is that it relies heavily on property taxes, which are inherently unjust and significantly distort economic decision-making. The administration of property taxes is intrusive and overly burdensome and should be reformed or the tax should be abolished. Conversely, consumption taxes have low administrative costs, are transparent, and put the least amount of drag on the state economy. Importantly, consumption taxes have been a reliable source of revenue and are acceptable to the public (please see the results of the TCCRI poll from January 2004, found here). There are other competing proposals that deserve consideration by the Legislature; they will be discussed by the Task Force.

Some of the questions the Task Force will consider include:

• Should Texas enact a stronger Constitutional Taxation and Expenditure Limitation (TEL), as has been previously debated?
• How should business taxes be reformed to fairly apply to all businesses without stifling the robust Texas economy?
• How can the State levy taxes so that Texans are most free to enjoy the profits of their hard work?
• To what extent should exemptions and exclusions to taxation be abolished or limited as a means of avoiding the creation of new taxes?

Furthermore, the State Taxation Task Force will operate on the following principles of taxation:

• People always shoulder the burden of any tax, even on businesses;
• Taxes should be transparent to the public;
• Taxes' impact on the economy should be a prime consideration, and;
• Business and consumer taxes should be applied uniformly by ending loopholes and exemptions.