An Analysis of the Sharp Commission Plan

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Dick Lavine /(512) 320-0222 x 101

April 17, 2006

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In this Policy Page, we analyze the Sharp Commission’s proposed tax plan. Although the commission proposes an innovative business tax, the plan creates serious budget problems by cutting old taxes more than it raises new taxes, leaving the state with less net revenue. On the legal front, the commission’s plan does not create the necessary “meaningful discretion” over local tax rates required by the Supreme Court’s June 1 deadline. Finally, the plan increases the overall regressivity of the state’s tax system. On Monday, the Legislature convenes in special session to consider the commission’s proposal and other ideas. What happens will profoundly affect the ability of state government to fund all public services, not just public education. We hope this analysis is useful to you.