AUSTIN, Texas — Michelle Ward loads up her car with clothes and baskets from Goodwill. She spent about $60 on necessities for her family.
“I love getting a good deal, and thrifting actually helps with my family’s expenses and making sure we can get really cool things and not have to pay a lot,” Ward said.
As a real estate agent, Ward is used to showing out-of-towners’ homes in Austin. Many are surprised when they realize how expensive it’ll be to live here.
“A lot of people come to Texas because there isn’t a state income tax, but when they actually get here and realize how much they’re paying in taxes in other respects for goods and services, then it really tips the scale and makes it even,” Ward said.
That’s why she supports a bill to cut the sales tax rate from 6.25% to 5.75%. Since 1990, Texas has had a 6.25% state sales tax, with local governments given the option to raise it to 8.25%. Those combined means Texas has the 14th highest sales tax rate in the nation, according to the Tax Foundation. The sales tax takes a bite out of your income every time you buy clothes, coffee, toilet paper, you name it. It’s primarily responsible for the nearly $33 billion budget surplus. The bipartisan push to cut sales taxes has the backing of the governor.
GOP leaders are promising a sizeable chunk of the budget surplus will go toward reducing property taxes, but there’s growing bipartisan support to cut sales taxes as part of the bigger relief package.
Sen. Royce West, D-Dallas, filed the legislation to slash the sales tax rate by half a percent. He estimates that a family of four could save $500-600 a year with a half-cent sales tax cut. The senator said he’s also considering some other policies.
“We’re flush with cash right now, and there will be monies that will be put into our treasury... We won’t appropriate those dollars. They’ll be sitting there for future rainy days, if you will. That’s in addition to the rainy day fund that we have,” Sen. West said. “And so, we’ve got to make sure that we plan for when we have a downturn in the economy, and we’ll take that into consideration. And that will be kind of, I guess you could say, the balance between whether or not we do a straight half-cent sales tax reduction, or end up doing some more sales tax holidays.”
Sen. West has the support of Sen. Bob Hall, R-Edgewood. Three other Democrats have also signed on as co-authors, including Sen. César Blanco, D-El Paso. He said if the bill passes, it’d save Texans about $4 billion a year. Or a dollar for every $200 spent on taxable goods.
“I think that helps address those Texans that rent that don’t own property,” Sen. Blanco said. “This is a way for them to save money.”
Sen. Blanco added that cutting the sales tax rate, in addition to providing property tax relief, could benefit all Texans, not just those who own homes.
“Lowering the sales tax is a great idea, especially for working families here in Texas,” said Austin real estate agent Ward. “People are really struggling in Austin to afford to live here. Things have really changed in the last 20 years that I’ve lived in the Austin area, and I think that might be a really nice gesture.”