News88th TXLege

Corporate Welfare Revival: Taxpayers Face Uphill Battle

March 2, 2023
Jeramy Kitchen
88th Legislative Session, Corporate Welfare, Greg Abbott, Property Tax

Earlier this week, Texas taxpayers bore witness to yet another effort to revive the now-defunct largest corporate welfare program in Texas, the Chapter 313 tax abatement program.

To make matters worse, Republican leadership in both chambers of the Legislature and the governor himself have started coalescing around the idea, even though they sought fit to discontinue the program in the last legislative session.

On Tuesday, Texas House Speaker Dade Phelan announced another slate of his legislative priorities for the ongoing 88th Legislative Session. Among them was House Bill 5, authored by Republican State Rep. Todd Hunter (Corpus Christi), who boasts a dismal career F rating on our Fiscal Responsibility Index. House Bill 5 effectively replaces the program with slight alterations to its structure, including the exclusion of “renewable” energy as those who would qualify for such an abatement, an objection many lawmakers had to the program last session.

To make matters worse, almost immediately as it was filed, the legislation included a max amount of joint authors, with two of them being chairmen of House committees the legislation is likely to travel through. Both Republican State Reps. Morgan Meyer (Dallas), chairman of the House Ways & Means Committee, and Dustin Burrows (Lubbock), chairman of the House Calendars Committee, immediately signed on as joint authors.

The legislation was referred the following day to the House Ways & Means Committee and saw an additional 15 House lawmakers from both parties sign on as co-authors. Different legislation had been filed in mid-February by Republican State Rep. J.M. Lozano (Kingsville) to usher in a complete revival with little to no change. Notably, Lozano signed on as a co-author to House Bill 5 as well.

Texas Gov. Greg Abbott also held a press conference Wednesday, where he announced that Texas was the recipient of an 11th consecutive “Governor’s Cup” by Site Selection Magazine. The award serves as a recognition for the state that attracts the most business and jobs. Though he did not specifically cite support for the revival of corporate welfare in his announcement, a follow-up question from a reporter prompted Abbott to simultaneously indicate he did not believe the expiration of the Chapter 313 program would hinder the state’s ability to compete for business and also support the idea of replacement legislation as an improvement of the program.

At his State of the State address in mid-February, Abbott also alluded to his support for economic incentives by saying, “To keep Texas the best state of business, our local communities need new economic development tools this session.” However, he did not name it as an official emergency item to be considered by the Legislature.

Who Wants This?

Big business. Plain and simple.

This is perhaps best illustrated by how quickly more than 200 chambers of commerce, economic development councils, and business organizations publicly announced their support for the efforts shortly after the legislation was filed. However, recent studies indicate only 15% of businesses that have received such incentives would have located elsewhere without them, and at least 75% of businesses nationwide that received incentives would have still opted to relocate without them.

The Texas Legislature is comprised of only lawmakers who subscribe to the Republican or Democrat parties. Both of these party platforms express opposition to such a thing as corporate welfare.

The Texas GOP platform states:

“Plank 94: Property Tax Abatements: We support repealing Tax Code Chapter 312 county and municipal property tax abatements, and we oppose reintroducing school property tax abatements, formerly known as Chapter 313.”

The Texas Democratic Party platform states:

“Eliminate tax loopholes and unproductive special breaks to simplify the tax system and provide revenue for essential services.”

That same platform continues:

“Prohibit ‘corporate welfare’ incentives that pit states and communities against each other.”

An Affront to Taxpayers

Texans for Fiscal Responsibility’s position is that abatements allow large corporations and those with political influence to temporarily exempt a portion of their property’s value from taxation—a privilege not granted to Texas homeowners or the vast majority of businesses. This has become an attractive option for giant corporations seeking temporary relief from Texas’ oppressive property tax rates.

Taxpayers should not be stuck with increased tax bills in order to carry the burden of well-connected businesses. Instead, they should demand the Texas Legislature let these programs expire and encourage local governments to compete for business by cutting taxes and bureaucratic red tape to foster an environment of free enterprise, rather than picking winners and losers.

The Takeaway

In the midst of a legislative session where individual taxpayers’ fervor has never been stronger for lawmakers to act on property tax relief and a path to the tax’s elimination, taxpayers should ask their lawmakers whose interests are being prioritized—those of business or those of the individual taxpayer.

If lawmakers were sincere about providing economic incentives to attract talent and businesses to Texas, they would continue to create an environment that ensures little to no regulation and the lowest tax burden possible, benefiting both businesses and individuals. Government should never be in the business of picking winners and losers in a system of free enterprise.

Concerned taxpayers can find contact information for their lawmakers here.

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