Home > First Reading > Archives > 2009 > October > 23 > Entry
Fact-checking Perry’s CNBC claims on taxes
Revised history on the revised franchise tax … Group that condemned Hutchison now praises her … Videos, we’ve got videos
Happy early birthday (Saturday) to consultant Luke Legate.
Austin weather from News 8 Austin’s Maureen McCann: Mostly sunny and comfortably mild. High of 73.
(Send me an e-mail at jembry@statesman.com if you want a link to First Reading as soon as I post it.)
Thursday highlights and the day ahead
Gov. Rick Perry went on CNBC’s “Kudlow Report” on Thursday and was asked a series of questions about the state’s tax structure.
Here’s the full segment, or at least as much as CNBC posted on the Web:
Perry made a couple of claims that are worth revisiting.
As Perry and host Larry Kudlow were discussing the state’s lack of a personal income tax, Kudlow asked him about taxes on business. Kudlow said, “You do have corporate revenue taxes as far as I know and they have been raised.”
Perry said, “They have not been raised. As a matter of fact, we lowered them in 2006, it was a 4 and a half percent rate on our franchise tax, we moved it down to 1 percent. So I hate to disagree with you there. You know for a fact that Texas is a low-tax state.”
When Perry and the Legislature came up with a new franchise tax in 2006 to offset cuts in school property taxes, sure, the rate lowered. But that rate was assessed on something entirely different under the new tax. The old franchise tax captured 4.5 percent of earned surplus (also known as profit). The new tax captures 1 percent of total revenue minus the cost of goods sold or minus total compensation.
The point of all that was that the Legislature didn’t simply lower the rate of the tax, which is a conclusion one could draw from Perry’s comments.
Perhaps the more significant change in 2006 was that the new franchise tax was applied to many more businesses than the old loophole-ridden franchise tax. Using the projections that were in play at the time, the new tax was created so that businesses would pay, in total, $3.39 billion more per year in franchise taxes, because many businesses had been paying nothing under the old one.
That’s a large number, but it can’t be looked at in a vacuum. Because while franchise taxes went up by $3.39 billion (according to the projections at the time), property taxes on businesses went down $3.04 billion, leaving a relatively small net tax increase on businesses. And here’s the most important piece — it was passed in order to give homeowners an annual property-tax savings of $2.79 billion per year.
Here’s one other statement from Perry’s interview Thursday that’s worth revisiting: He said that in 2006, “we cut our property taxes by one-third.” He then repeated it a few seconds later.
That’s a little too simple a way of putting it. The state cut tax rates on school district operations by one-third, but that didn’t affect other aspects of property-tax bills, such as county and city taxes and taxes levied (with voter approval) to build more schools. And the one-third cut hasn’t fully held up because school districts have had to increase their tax rates to pay for operations. Plus there is the issue of rising appraisals, which Perry said the Legislature needs to address.
The Hutchison campaign put out information last night saying how much state tax collections have increased over the last couple of years. But what the campaign didn’t point out is those state taxes have gone up in order to make possible a larger cut in local property taxes.
I realize it probably seems like we’re a little too fixated on that 2006 special session here at FR World Headquarters. But it’s clear that in this Republican primary, we’re going to continue to return to the question of whether the Legislature cut taxes or raised them in 2006. The overall answer is that, taken on the whole, taxes were cut. It’s why we have a structural deficit. But obviously the debate can be sliced any number of ways.
• A few videos have piled up over the last couple of days. First, from the Perry people, Hutchison and the financial rescue plan:
The Hutchison campaign on on Perry’s fundraising ethics:
And everyone please welcome to the debate the Texas Democratic Party. Here’s their look at what they describe as Perry failures:
• A day after naming her “porker of the month” for her many earmark requests, Citizens Against Government Waste praised Hutchison for fighting cap-and-trade legislation with Sen. Kit Bond of Missouri. “Senators Hutchison and Bond should be commended for exposing the true costs of climate-change legislation,” the group said in a letter to senators.
• Todd Gillman with the Dallas Morning News in Washington got the big-time brush-off from Hutchison a couple of days ago.
• Programming note: For at least the first few days of next week, perhaps the whole week, I will be out of pocket and won’t be posting FR. Check back here Thursday to see if I’m back up. Sorry bout that, but I’m taking a few days off to visit a very special place.
Poll watch
From the Associated Press: “The number of Americans who believe there is solid evidence that the Earth is warming because of pollution is at its lowest point in three years, according to a survey released Thursday. The poll of 1,500 adults by the Pew Research Center for the People & the Press found that only 57 percent believe there is strong scientific evidence that the Earth has gotten warmer over the past few decades, and as a result, people are viewing the problem as less serious. That’s down from 77 percent in 2006.”
Gallup says President Obama’s approval rating fell 9 points — an unusually large drop — during the second and third quarters of his time in office.
Countdown
41 days until the filing period begins.
73 days until the filing period ends.
116 days until early voting begins.
130 days until the March 2 primary.
In the news
“It’s time for our periodic live look-in at the state of play in the 2010 elections. Today’s update comes with a special bonus for Democrats who stay tuned to the bottom of the page. At no additional charge, I will tell you how to make Republicans spend millions of dollars they don’t want to spend. You like to make Republicans spend their money, don’t you? Sure you do. Stay tuned.” Ken Herman
“Gov. Rick Perry says he’s OK with his re-election campaign getting help from the head of the Texas Alcoholic Beverage Commission, who solicited donations from the owners of the bars and restaurants his agency regulates.” Associated Press
“Proposition 11 has sparked a fundamental, statewide debate. It’s between those who hate eminent domain and those who hate it even more.” San Antonio Express-News
“Senate Majority Leader Harry Reid is leaning toward putting a public insurance option in the Senate health reform bill — a signal that Reid increasingly believes he can get the votes needed for a plan that would allow states to opt out of the program, senators said Thursday.” Politico
Everything else
Angels beat the Yankees on Thursday to force a game six, Saturday at 7 p.m. on Fox.
Magic Johnson says in a new book that he and Larry Bird helped write that he lobbied to keep Isaiah Thomas off of the original “Dream Team.” Thomas says he’s hurt by the revelation.
This weekend is the Austin Film Festival. Our great team at austin360.com has compiled some of the highlights.
Get more Legislative coverage inside the Virtual Capitol
Comments
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By Conservative Texan
October 23, 2009 9:37 AM | Link to this
75% of your 4 videos are negative on Governor Rick Perry. How appropriate. About sums up your overall coverage of the Rick/Kay race.
By Jason
October 23, 2009 10:04 AM | Link to this
Everyone should read this piece
http://online.wsj.com/article/SB10001424052748704224004574489530713762884.html
By Hal
October 23, 2009 10:12 AM | Link to this
I truly wonder if the editors of this paper would like to commit economic suicide. There is not a single “reporter” at this paper who has anything but hatred for everything Republican. Mr Editor and Mr Embry have you looked at the latest Audit numbers for your paper?? They are horrible. The number of subscribers to this paper have gone into the tank. Yet you seem to bury your head in the sand. You make no attempt to have reporters or columinist who reach out to moderate, conservative and Republican voters. You fill you paper with hate. What kind of business model turns its back on 40% of the people in your community and basically tells them we hate your values and beliefs so we will attack attack attack. They have responded by cancelling their subscriptions. Mr Embry and Mr Zipp may the last one out of the Austin American turn out the lights please.
By GeorgeW
October 23, 2009 10:18 AM | Link to this
I call on all Texas Democrats to vote for the third candidate running for the Republican Nomination to Governor. I don’t even know her name but I know I will vote for her because the other two are proven partisan pocketlining failures.
By Jane
October 23, 2009 10:18 AM | Link to this
Here is a story you wont see in this column. Embry you cannot gloss over the poll numbers. They are real. Americans have voted on this Obama administration and they dont like what they see.
Barack Obama sees worst poll rating drop in 50 years The decline in Barack Obama’s popularity since July has been the steepest of any president at the same stage of his first term for more than 50 years.
By Toby Harnden in Washington Published: 7:38PM BST 22 Oct 2009
Barack Obama’s popularity has fallen steeply since being elected last year Photo: AFP Gallup recorded an average daily approval rating of 53 per cent for Mr Obama for the third quarter of the year, a sharp drop from the 62 per cent he recorded from April.
His current approval rating – hovering just above the level that would make re-election an uphill struggle – is close to the bottom for newly-elected president. Mr Obama entered the White House with a soaring 78 per cent approval rating.
Related Articles Americans cool on global warming US congress extends hate crime protection to homosexuals Barack Obama’s oratory loses its oomph Barack Obama ratings fall as polls show honeymoon may be over US Election: John McCain, Barack Obama stage second presidential debate in Nashville Barack Obama declines debateThe bad polling news came as Mr Obama returned to the campaign trail to prevent his Democratic party losing two governorships next month in states in which he defeated Senator John McCain in last November’s election.
Jeffrey Jones of Gallup explained: “The dominant political focus for Obama in the third quarter was the push for health care reform, including his nationally televised address to Congress in early September.
“Obama hoped that Congress would vote on health care legislation before its August recess, but that goal was missed, and some members of Congress faced angry constituents at town hall meetings to discuss health care reform. Meanwhile, unemployment continued to climb near 10 per cent.”
Governor Jon Corzine of New Jersey is in severe danger of defeat while Democrats are fast losing hope that Creigh Deeds can beat his Republican opponent in Virginia. Twin Democratic losses would be a major blow to Mr Obama’s prestige.
Campaigning for Mr Corzine in Hackensack on Wednesday night, Mr Obama delivered a plea that almost seemed as much for himself as the local candidate: “I’m here today to urge you to cast aside the cynics and the sceptics, and prove to all Americans that leaders who do what’s right and who do what’s hard will be rewarded and not rejected.”
Mr Corzine, a former Goldman Sachs executive and multi-millionaire, is currently running even in New Jersey, which is normally comfortably Democratic, while Mr Deeds is trailing badly in Virginia, a swing state that was key to Mr Obama’s 2008 victory.
Mr Obama is also facing widespread criticism for his drawn-out decision-making process over what to do next in Afghanistan.
Republicans sense Mr Obama is in a vulnerable position and this week saw the return to the public stage of his perhaps most vehement opponent – Vice-President Dick Cheney.
In a blistering speech on Wednesday night, he accused Mr Obama of failing to give Americans troops on the ground a clear mission or defined goals and of being seemingly “afraid to make a decision” about Afghanistan “The White House must stop dithering while America’s armed forces are in danger,” Cheney said at the Center for Security Policy in Washington.
“Make no mistake, signals of indecision out of Washington hurt our allies and embolden our adversaries.”
He hit out at Obama aides who suggested that the Bush administration had failed to weigh up conditions in Afghanistan properly before committing troops.
“Now they seem to be pulling back and blaming others for their failure to implement the strategy they embraced. It’s time for President Obama to do what it takes to win a war he has repeatedly and rightly called a war of necessity.”
By BushWarCriminal
October 23, 2009 10:18 AM | Link to this
Funny these more ons who complain about Embry keep coming back and reading it everyday….
HYPOCRITES. That is why you were voted out of office and will continue to be voted out of office. You say great things, it is what you do that is the problem…..
By Jay
October 23, 2009 10:24 AM | Link to this
We come back because it is FREE and we dont send our money to support an entity that promotes hate against people.
By GeorgeW
October 23, 2009 10:28 AM | Link to this
Republican’s love to cut and paste big old articles, that they are totally incapable of writing themselves, like I’m going to read it and suddenly change my mind about my vote for Obama and a radical change from the old regime of warmongers. They make me laugh because they are totally irrelevant now and will remain so for the forseeable future.
By Johnson
October 23, 2009 10:29 AM | Link to this
Hypocrite— I guess you must be talking about Embry are you not BUSHWARCRIMINAL?
By A Nation Of Millions
October 23, 2009 10:32 AM | Link to this
In Memphis on Sunday, Nation of Islam leader Minister Louis Farrakhan said to an audience that the H1N1 Swine Flu Vaccination was developed to depopulate the human race.
The 76-year-old Louis Farrakhan, speaking for nearly three hours to a religious group on the 14th anniversary of the Million Man March in Washington, believes the H1N1 Swine Flu Vaccination is nothing more than a guise to depopulate the Earth, according to United Press International.
“The Earth can’t take 6.5 billion people. We just can’t feed that many. So what are you going to do? Kill as many as you can. We have to develop a science that kills them and makes it look as though they died from some disease.”
By Tim
October 23, 2009 10:37 AM | Link to this
Embry the numbers on Real Clear Politics are even worse this morning for Obama
Gallup 10/19 - 10/21 1547 51 41
Rasmussen Reports 10/19 - 10/21 1500 LV 47 52 USA Today/Gallup 10/16 - 10/19 52 46
By Stop Obsessing
October 23, 2009 11:19 AM | Link to this
I’m mystified by the folks that blast Embry for overlooking poll numbers on Obama or being biased one way or another.
I read First Reading for TEXAS political and state news, not presidential polling numbers. It’s great that he includes them, but they are in passing and placed toward the end because that’s not the focus of this Blog. The way they are included has never indicated to me, a Republican, that he’s biased one way or another.
Surf on over to Politico, Rasmussen, Drudge or something else for your particular take on all things DC and the latest Obama numbers.
And, re: the videos, he posts what he gets — in many respects, I find them ridiculous and silly lame attempts by both candidates (sorry Dems but you are a late comer to this dance and yours is especially lame) to try to generate interest in their campaigns and press coverage for themselves. In reality, it’s not how I plan to determine which GOP-er I’ll vote for come March 2. They’re just stupid and amusing, not vote deciders/influencers, at least not for me.
By Larry
October 23, 2009 11:53 AM | Link to this
I spent nearly 30 years enforcing the tax laws for the state of Texas. I can tell you most of the laws are so complicated the voters have no idea of their impact. They have no idea of who pays these taxes and who has special exemptions. And special interests have always helped write these laws. One of the biggest special interests is the American-Statesman. The AAS is part of a nationwide chain and they could care less about shouldering their fair share of paying Texas taxes. In the ’80s they didn’t want to collect sales tax like every other retailer…so they got a law passed making newspapers not subject to the sales tax. Then a couple years later they pushed an exemption from taxes for manufacturing businesses….a newspaper is a manufacturer of newspapers though they didn’t tell us that while they were pushing this legislation. The AAS got that exemption so now they can buy virtually everything tax free, unlike the rest of us and don’t have to collect tax when they sell their product. Then in the ’90s they formed a LLC so they wouldn’t be subject to the Texas Franchise Tax….a special exemption was written specifically for LLCs. You probably can check other taxes I didn’t deal with like property taxes and I would bet they have some exemptions there also. And after all this chicanery this paper still wants to lecture folks on what taxes they should be paying. Amazing….
By Good Job
October 23, 2009 12:10 PM | Link to this
Good job Jason Embry, keep reporting the facts and leave the fiction to Perry, he seems to be the master of misinformation (wonder who provides his “stuff” some lobbyist, I bet) —“birds of a feather flock together”.
By Johnny
October 23, 2009 12:48 PM | Link to this
Hmmmmmmm. Thanks Larry. I did not know that. Any comment Mr Embry????? Any comment Mr Zipp??? Larry I think you need to write a letter to the editor and see if the Austin UnAmerican believes in free speech and prints your letter or tries to oppress free speech like the Obama aadministration.
By OINK OINK
October 23, 2009 1:10 PM | Link to this
THANKS FOR POSTING A WRITTEN STORY ABOUT THE VIDEO INSTEAD OF ACTUALLY MAKING ME WATCH THE VIDEO. I CAN’T STAND THE SIGHT OR SOUND OF THAT CORRUPT SWINE PUNK PERRY. NOT MANY PEOPLE CAN MAKE ME ILL BY JUST THEIR VERY SIGHT BUT PERRY SURE CAN!!! I SURE HOPE THAT LITTLE RAT GETS KICKED OUT OF OFFICE COME NEXT YEAR!!!
By Where and what
October 23, 2009 2:11 PM | Link to this
Picking a higher point on an income statement (for a business) to get a tax is an increase in taxes. Taxing after COGS (before expenses) instead of at a lower place like on surplus (which is after all kinds of expenses) isn’t lowering taxes. 1% of a million is more than 4% of whats left after all deductions and expenses.
Same thing with Perry’s idea of not collecting employee related taxes and now the rates are going to be high next go round. And Perry just reinforces that he likes giving giant industries the breaks (franchises are NOT considered “big corporate business” in Perry’s eyes).
That KBH video of Perry got a laugh.
Enjoy Vegas.
By SCS
October 24, 2009 12:41 AM | Link to this
? for Jane: Where do you get all of that questionable information? FoxNews……hahahaha.
By Greg Cialini
November 12, 2009 5:40 PM | Link to this
How about some “fact-checking” on Obama’s BS……oh’, right….like that will ever happen from the State Controlled Media