Texas wants more 'sin' (topless dancers --- apply in Austin)
April 21, 2004
A Texas Bid to Shift School Finances to 'Sin Taxes'
By DAVID CAY JOHNSTON
nytimes.com
AUSTIN, Tex., April 20 — How much money Texas spends to teach children reading, writing and arithmetic may soon depend in part on how successful women like Vanity, Destiny and Rio of the Yellow Rose, a topless bar in this state capital, are in attracting customers.
Gov. Rick Perry called the Legislature into special session Tuesday to change the way public education is financed in Texas. He wants to give billions of dollars in property tax reductions to the most affluent homeowners while making up part of the revenue loss through a vast expansion of legal gambling, increasing cigarette taxes by $1 a pack, raising taxes on alcoholic drinks and collecting a tax of at least $5 each time a patron enters a topless bar.
The governor's plan faces an uncertain future, but it seems likely that Texas will adopt at least some of his "sin tax" proposals. Mr. Perry is a Republican, and Republicans have comfortable majorities in both houses of the Legislature.
The idea that the education of future generations should depend on increasing sin taxes is not unique to Texas. Across the country, politicians, eager to avoid anything that looks like a tax increase, are turning to levies on what Governor Perry calls "unhealthy behaviors" to finance education.
Kentucky, Maryland, Missouri, Tennessee, Utah and West Virginia are among the states that have shifted part of the cost of schooling from income, sales and property taxes to levies on gambling and nude or topless dances in the last few years.
Other states are considering such plans, including New York, where Gov. George E. Pataki is promoting more gambling to raise $2 billion annually for public schools, like making video lottery terminals more widely available.
"What we are seeing is renewed interest across the states in taxing vices," said Bert Waisanen, a tax policy specialist at the National Conference of State Legislatures.
These efforts illustrate how the antiquated systems the states rely on to raise revenue are failing to generate enough to finance basic government services, a trend aggravated by growing sophistication among the wealthiest individual and corporate taxpayers in escaping state levies. In Oregon, for example, most major businesses pay only the $10 minimum corporate income tax each year.
The trend toward raising sin taxes, and allowing more behavior that brings in such taxes, comes as elected officials are under pressure to sign pledges that they will never vote to raise taxes. Such pledges are being promoted by antitax groups like the Club for Growth, which have worked to make "tax" a word so vile that many officials would rather make gambling as convenient as buying gasoline and have the state keep count of topless-bar customers than consider fundamental changes in its tax structure.
The sin taxes are often sold as if they are not really tax increases at all. In a presentation to a legislative school-finance committee, Governor Perry spoke of tax relief, tax cuts and rewards on Monday, but never of tax increases.
When State Senator Steve Ogden, a College Station Republican, asked Mr. Perry if the proposed levies on gambling, nicotine, alcohol and topless bars as well as some other provisions were in fact "tax increases," the governor replied, "I consider this shifting off property taxes."
The governor's plan is intended to end a system, known as Robin Hood, that takes property tax revenues from wealthy school districts to help finance education in poor ones. It would also close a loophole, similar to one in many other states, that allows companies to escape state taxes by having their assets owned by shell companies in Delaware.
Opponents of the plan say the sin-tax strategy has many flaws. Such taxes are not a reliable source of income, the critics argue. When times are bad, most people will pay their property taxes, but they may cut back on trips to topless bars. The critics also say that such taxes encourage government to expand industries that prey on bad behavior and that they are regressive because lower-income people tend to spend more of their money on such activities.
In Texas, Carole Keeton Strayhorn, the state comptroller, is opposing Governor Perry's proposals, saying that his plan replaces Robin Hood "with robbin' everyone."
Homeowners would get less than half the $418 average annual property tax cut the governor promised, Ms. Strayhorn said, adding that the revenue raised by one-time accounting changes and sin taxes would be $10 billion less than the property tax revenues the state would lose over the next five years.
The governor's press secretary, Kathy Walt, noted that Ms. Strayhorn, while a Republican, was a rival of the governor and said her analysis relied on "fuzzy math."
While Mr. Perry presented himself as a proponent of more spending on education, the Texas budget for this year and next cuts general-fund spending on kindergarten through high school education by 4.2 percent and reduces spending from dedicated state funds by 33.5 percent. Those cuts totaled $893 million at a time when a state commission said Texas needed to increase spending on education by $4 billion annually if most children were to get an education sufficient to prepare them to attend college.
Total state spending on education did rise by 2.7 percent to $33.8 billion over two years, but only because of a $1.2 billion, or 22 percent, increase in federal school aid.
F. Scott McCown, who as a state judge tried three major school finance lawsuits in Texas between 1990 and 2002, said there was simply not enough sin in America for sin taxes to finance education. But even if there were, Judge McCown said, it was unwise to be "building your school system on sand instead of building it on rock."
"There is a difference between taxing sins you have already made legal and in making new sins legal so you can tax them," he said, noting the expansion of gambling proposed by Mr. Perry, including selling state lottery tickets at gasoline pumps.
The governor's plan, Judge McCown said, involved "taking society's most important function, educating children, and financing a significant amount of it with sources of tax money that are volatile, unreliable and over time diminishing."
Most states, the judge said, rely on a three-legged stool of taxes: levies on income, sales and property. Texas does not have an income tax, he noted, and by lowering property taxes, "the governor is trying to run the state on a tax and a half."
A tax on admission to topless bars is just fine with two of the three dancers at the Yellow Rose, which is in a brightly painted cinder block building in a neighborhood marked by derelict automobiles and failed retail stores. The dancers would give only first names.
Vanity, 26, who said she expected to start a new job as a United States marshal within days, said she was "all for more school funding."
Destiny, 23, a mother of two, said that an admission tax would not reduce demand for her services because "men are men."
But an older dancer saw it differently. Rio, 32, a mother and homeowner who said she had a bachelor's degree in art, said she was appalled by the governor's proposal. She characterized it as immoral because it linked "adult entertainment" with school children and because she saw it as a tax increase on the women like herself, who she said lack political influence.
"This is the lowest thing they could do," Rio said. "The governor wants to give the owners of the biggest houses a tax break and he wants women who have to take their clothes off for money to pay for it."
Copyright 2004 The New York Times Compan |
