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CORRECTION, 4:45 p.m. Jan. 17, 2012: This fact check originally presented per-capita state and local sales tax collections for 2000 and 2010 attributed to information from the U.S. Census Bureau. But, as a reader helpfully pointed out, those figures solely reflected state taxes. This article has been revised accordingly. The changes do not affect our rating of the statement.
U.S. Rep. Ron Paul, asked if he credits Texas Gov. Rick Perry for job gains in their home state, replied : "Not quite."
At the Sept. 12, 2011, CNN/Tea Party Express Republican presidential debate, Paul continued: "I'm a taxpayer there. My taxes have gone up. Our taxes have doubled since he's been in office. Our spending has gone up double. Our debt has gone up nearly triple."
We’ve reviewed claims about spending and debt in Perry’s decade-plus as governor.
For instance, state spending from all sources went up nearly 79 percent between 2000-01 and 2010-11, though adjusted for population and inflation, the increase was 18.2 percent. Also, as we noted last year, raw debt doubled, though last month we rated Mostly True Perry’s claim that Texas has the fourth-lowest per-person debt of any state in the nation and the lowest per-person debt of the big states.
Until Paul piped up, we hadn’t heard that taxes doubled under Perry.
Paul’s campaign offered no direct backup to his tax claim, though spokesman Gary Howard pointed out news and opinion articles on Perry’s 1987 vote as a Texas House member for the biggest tax increase in state history and on 2006 legislation Perry signed into law that increased cigarette taxes by $1 a pack, overhauled the state’s business franchise tax and changed how the state taxes the sale of used cars, all toward covering the costs of a statewide one-third cut in local school property taxes.
Later, Paul’s campaign told us he’d been referring at the debate to a doubling in his own franchise taxes. We requested, but did not field, elaboration.
The Perry-approved revamp of the state's corporate franchise tax shifted businesses from a 4.5 percent tax on a company's profit to a new approach. The change reduced the so-called margins tax rate to 1 percent while broadening its application to the annual revenue of qualifying companies minus one of three options: the cost of goods sold, the cost of employee compensation or 30 percent of total revenue.
When it was adopted, the revamped tax was expected to bring in $5.9 billion in fiscal 2008—about a 90 percent increase (not quite double) over fiscal 2007. In fact, the tax brought in $4.5 billion that first year, a 45 percent increase. The tax continues to underperform.
Dale Craymer, president of the Texas Taxpayers and Research Association, cautioned against judging the franchise tax in isolation, reminding us by email that the 2006 changes "never would have been proposed, and most certainly never would have passed, had (they) not been linked to a $7 billion (statewide) property tax cut."
Craymer’s point: "The overall package was a net tax cut. It was intended to be a $2.5 billion a year tax cut, but ironically because the franchise tax proved to be a smaller tax than anticipated, it ended up being a $4 billion tax cut."
We’re not suggesting that Perry has a no-new-taxes’ record. As noted in a November 2010 fact check, Perry approved other tax hikes as governor including a 2 percent tax on the retail sale of fireworks to help fund a rural volunteer fire department insurance fund and a 1 percent tax on the purchase or rental of diesel equipment.
And tobacco users were hit again in 2009, when the Legislature voted to tax smokeless tobacco on weight rather than price, "generating additional revenue of $105 million over two years," according to a May 28, 2009 Dallas Morning News news article. According to a December 2009 report from the Legislative Budget Board, some of the new revenue helps repay medical-school loans for doctors who agree to practice in under-served areas of the state. The rest was to be used to help offset franchise tax revenue that was lost when the Legislature temporarily exempted 40,000 businesses.
Phew. Take a breather?
Our previous reporting did not gauge whether taxes doubled.
To explore this aspect, we turned to annual cash reports from the Texas state comptroller’s office. In fiscal 2001, the year Perry succeeded George W. Bush as governor, the state collected $27.2 billion in taxes. In fiscal 2010, the latest completed fiscal year, the state gathered $35.4 billion in taxes.
So, unadjusted for inflation, state tax collections increased over most of Perry’s time as governor by about 30 percent.
The annual reports also include per-person calculations, yielding another way to compare changes. In fiscal 2001, the state collected $1,283 per resident. In fiscal 2010, the state reaped $1,404 per resident, an increase of about 9 percent, not adjusting for inflation.
Separately, the U.S Census Bureau calculated per-capita state taxes collected until a few years ago. In 2000, the bureau says, state government in Texas collected $1,315 per person, a rate that was the 49th lowest among the states. In 2010, state government collected $1,567 per person; we reached this figure by dividing the bureau’s tabulation of Texas state taxes collected that year, nearly $39.4 billion, by the state’s April 2010 population of 25.1 million.
Another approach: The non-partisan Tax Foundation, based in Washington, annually estimates how much residents of each state cough up for state and local taxes. In 2000, the foundation says, Texans were taxed at an effective rate of 7.1 percent; meaning that many cents of every dollar in income went to state and local taxes. That year, the foundation says, each resident paid about $2,214, on average. In 2009, the latest year checked, Texans paid an effective rate of 7.9 percent; the per-person amount of taxes paid was $3,197--up 44 percent from 2000, though that’s 17 percent adjusted for inflation.
Foundation economist Mark Robyn agreed there doesn’t appear to have been a doubling in taxes. He added in an interview: "I’m not saying there’s no possible way you can slice the data to get a doubling... I don’t know if there is a way."
We sure didn’t find one. The most that Texas taxes might have increased while Perry was governor is 44 percent, which is 17 percent when inflation is weighed.
Maybe Paul’s personal taxes doubled and he can show that’s also Perry’s fault. Paul provided no such evidence.
Generalized, his claim about taxes under Perry is so far off, it’s smokin’. Pants on Fire!
Texas State Comptroller, reports, "Annual Cash Report, 2001," Nov. 5, 2001; "Annual Cash Report, 2010," Nov. 1, 2010
The Tax Foundation, Excel chart, "State-Local Tax Burdens, All States, 1977-2009" (accessed Sept. 13, 2011)
Telephone interview, Dale Craymer, president, Texas Taxpayers and Research Association, Austin, Sept. 20, 2011
Telephone interview, Mark Robyn, economist, the Tax Foundation, Washington, Sept. 14, 2011
U.S. Census Bureau, charts, "States Ranked By Total Taxes and Per Capita Amount: 2000," (revised July 2002); "Resident Population of the 50 States," (April 2010); "States Ranked by Total State Taxes: 2010," (revised March 15, 2011)
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