Focus Report, Volume 86, Number 3, August 2019 Page: 11
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* Proposition 4: Prohibiting a state
individual income tax
HJR 38 by Leach (Fallon)Background
Texas Constitution Art. 8, sec. 1(a) requires all
taxation in the state to be equal and uniform. Sec. 24
allows the Legislature to impose by general law a net
income tax on individuals, including an individual's share
of partnership and unincorporated association income,
only if approved by a majority of registered voters voting
in a statewide referendum. Art. 8, sec.. 24(f) also requires
that at least two-thirds of net revenue collected under an
income tax be used to reduce the rate of maintenance and
operation taxes levied to fund public education.
Digest
Proposition 4 would add sec. 24-a to Art. 8 of the
Texas Constitution to prohibit the Legislature from
imposing a net income tax on individuals, including
on individuals' shares of partnership or unincorporated
association income.
The ballot proposal reads: "The constitutional
amendment prohibiting the imposition of an individual
income tax, including a tax on an individual's share of
partnership and unincorporated association income."
Supporters say
Proposition 4 would help keep the Texas economy
strong by ensuring that the state could not impose an
individual income tax, sending a message that Texas was
committed to maintaining a business-friendly, low-tax
economic environment.
The lack of an individual income tax in Texas is part
of the low-tax, pro-growth approach that has fueled the
state's robust economic expansion. It also helps attract
families and businesses relocating from other parts of
the country and seeking relief from burdensome taxes.
Prohibiting an income tax would safeguard the state'scontinued prosperity, as income and capital accumulation
are critical to economic growth. The introduction of
an individual income tax would discourage savings,
investment, productivity, job creation, and economic
growth in the state. It also would increase the size of the
state government at the expense of individual liberty and
result in higher costs to the taxpayer. Constitutionally
prohibiting an income tax would help prevent this growth
in state bureaucracy.
Although the Texas Constitution already requires
a proposed income tax be approved by voters in a
referendum, it does not explicitly prohibit such a tax.
This proposition would make it clear once and for all
that the state could not impose an individual income
tax, protecting both taxpayers and the state's economic
expansion. Proposition 4 would not endanger the state's
revenue stream, as Texas already generates enough revenue
to fund public education and public health without
imposing an individual income tax. In addition, the
proposed constitutional amendment would not jeopardize
the franchise tax or invite legal challenges regarding the
definition of an "individual" because the legislative intent
of the joint resolution is clearly to prohibit a state income
tax on the incomes of natural persons.
Critics say
Proposition 4 is unnecessary because the Texas
Constitution already includes a high bar for imposing a
personal income tax by requiring that it be approved by a
majority of voters in a statewide referendum.
Explicitly prohibiting an income tax in the Texas
Constitution could eliminate a potentially valuable source
of revenue for future Texans. Revenue from an individual
income tax would increase with economic growth and
in the future could help reduce the tax burden on Texas
businesses, which currently pay a higher proportion
of taxes in Texas than in other states. Constitutionally
prohibiting an income tax could constrain the state'sHouse Research Organization
Page 11
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Texas. Legislature. House of Representatives. Research Organization. Focus Report, Volume 86, Number 3, August 2019, periodical, August 27, 2019; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1364417/m1/11/?q=%22~1~1%22~1: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.