Thursday, June 27, 1996

Group Says Texas Hits Middle Class, Poor Harder

By MICHAEL HOLMES
Associated Press

AUSTIN - The tax system in Texas hits the poor and middle class harder than the rich, a new study said Wednesday.

Looking at the study, a Texas research group said the tax system should be overhauled to make more equal the share of income each group pays in taxes.

"This study just reflects the fact that Texas' middle class is losing out by not having a more progressive tax system," said Dianne Stewart of the Center for Public Policy Priorities. The center does research on how government policies affect low- and middle-income people.

Texas doesn't levy a personal income tax. Ms. Stewart said reliance on sales and excise taxes is regressive, hitting lower income people more heavily.

"Certainly, having an income tax is what alleviates the great burden on the middle class and the low-income families," she said.

"Certainly, income taxes have been dirty words in Texas for a long time. Until the middle class begins to really understand that they're being soaked by the current system, we won't ever see an income tax."

In 1994, Texans approved a state constitutional amendment to prohibit a personal income tax without voter approval. The amendment requires revenue from such a tax to go for school property tax relief and education.

Gov. George W. Bush, who has appointed a special committee to look at methods of providing relief from the $10 billion a year in school property taxes, opposes an income tax.

His spokeswoman, Karen Hughes, said the majority of Texans do, too.

"There are groups who want an income tax in Texas. Gov. Bush respectfully disagrees with them. The vast majority of Texans disagree with them," Ms. Hughes said.

"Gov. Bush philosophically believes that taxing consumption rather than income or fixed assets makes more sense because people have more control over their consumption. That's particularly true in Texas, where we exempt food and medicine from sales tax," she said.

The national study, conducted by the labor-funded Washington advocacy group Citizens for Tax Justice, ranked Texas among the "Terrible Ten" states for poor and middle class taxpayers.

The Texas policy center said Texas families earning less than $19,000 a year pay 13.8 percent of their income in state and local taxes, sixth highest in the nation.

The middle 60 percent, earning between $19,000 and $71,000, pay 8.5 percent of their income in taxes, while the top 1 percent - with average incomes of $743,000 - pay 4.4 percent in taxes, the study said.

"This report provides a stark measure of inequities in our tax system that place an unfair burden on low- and middle-income families," said Dick Lavine, fiscal analyst for the policy center.