Gallego Voted Against A Bill That Cut School Funding While Exempting Businesses From Taxes

To support its claim that Gallego “voted to increase taxes on 28,000 small businesses,” the ad cites Texas’ SB 1 from June 10, 2011. Rep. Gallego voted against passage.

SB 1 Extended Tax Exemption For Businesses Making Under $1 Million. From the Houston Chronicle: “Texas companies with less than $1 million in annual revenues will continue to be exempted from the state business tax for another two years. Online retail giant Amazon.com must add Texas state and local sales taxes to purchases by Texas customers starting Sept. 1 if the giant online retailer still operates a distribution center in the state on that date. Both provisions were part of Senate Bill 1 that was approved Tuesday by the Texas Legislature before ending its special session Wednesday. The $1 million exemption on the business tax was due to expire next year with the exemption falling to annual revenues of $600,000 or more. The $1 million exemption now will expire in 2014. About 28,000 Texas companies have annual revenues of between $600,000 and $1 million, according to the National Federation of Independent Business/Texas, which lobbied for the two-year extension.” [Houston Chronicle, 6/30/11]

SB 1 Also Cut Public School Funding By $4 Billion. From the San Angelo Standard-Times: “The school finance plan included in Senate Bill 1 – a sweeping bill that also contains billions in ‘nontax revenue’ to help balance the 2012-13 budget – reduces state aid to public schools by $4 billion. [San Angelo Standard-Times via Nexis, 6/10/11]

Gallego Supported Bill To Keep Online Retailers From Skirting Texas’ Sales Tax

To support its claim that Gallego “supported new sales taxes,” the ad cites Texas’ HB 2403 from April 27, 2011. Gallego voted for passage.

Gallego Supported GOP-Authored Bill To Make Amazon Collect Sales Taxes – Not To Levy A New Tax. From the Austin American-Statesman: “Taking a stand against Internet retailers like Amazon.com, the Texas House moved Tuesday to tighten the state’s rules on when online businesses must collect sales tax. By voting 122-23 to pass House Bill 2403 by Rep. John Otto, R-Dayton, lawmakers made their clearest statement to date that they are siding with state Comptroller Susan Combs in her push to force Amazon and other online retailers to collect taxes on sales made to Texans. Otto said his bill ‘is not a new tax, is not subjecting anybody to a new tax and is not increasing the rate of any tax. What this bill does is put into statute a clearer understanding of what constitutes physical presence,’ the determining factor in when a retailer must collect sales taxes.” [Austin American-Statesman, 4/27/11]

Allowing Online Retailers To Avoid Tax Collection Gives Them An Advantage Over Local Businesses. From the Associated Press: “Under a U.S. Supreme Court ruling, a company does not have to collect state sales tax if it does not have an office, or some other physical presence, in that state. The tax is still due on those transactions, but the customers are supposed to pay it. They usually don’t. Local retailers complain this gives Internet retailers an unfair price advantage. While Internet sales have gone up, local stores have seen a drop in revenues and blame the sales tax issue. State lawmakers also face a $27 billion budget shortfall over the next two years, and many want to see more efficient collection of taxes already on the books.” [Associated Press via Businessweek, 4/27/11]

Gallego Supported Bills Preventing Car Sales Tax Evasion And Funding Trauma Centers

To support its claim that Gallego “voted for higher taxes and fees,” the ad cites Texas’ HB 2654 from May 12, 2009, and HB 893 from May 1, 2001.

HB 2654 Imposed Sales Tax On Cars Given As Gifts, Except To Family Members Or Charity. According to the Texas House Research Organization’s bill analysis: “CSHB 2654 would amend Tax Code, sec. 152.001 to impose a motor vehicle sales tax on most recipients of a gift of, or transfer without payment of, a motor vehicle. It would amend sec. 152.025(a) to allow certain recipients to pay only a motor vehicle gift tax. A person would pay a gift tax if they received a motor vehicle gift from a: spouse; parent or stepparent; grandparent or grandchild; child or stepchild; sibling; guardian; or decedent’s estate. A tax-exempt 503(c) organization that would use the vehicle solely for purposes of the organization also would pay the gift tax.” [Texas House Research Organization, 5/11/09]

HB 2654 Was Designed to Cut Down On Fraudulent Tax Evasion. According to the Texas House Research Organization’s bill analysis, the bill’s supporters say: “CSHB 2654 would reduce the number of fraudulent gift transactions reported and would raise an additional $26 million in general revenue over the next biennium. Texas switched to a standard presumptive value to compute the motor-vehicle sales tax in 2006. Prior to that, used vehicles purchased through private-party transactions were taxed based on the buyer’s reported purchase price. Buyers had an incentive to underreport the value of the vehicles and pay less tax as a result. Since Texas switched away from self reporting of value to the standard presumptive value approach, there has been a sharp increase in the number of vehicles claimed as gifts. The total number increased from 330,908 gift tax transactions in 2006 to 408,920 in 2007. Buyers have an incentive to report a sale as a gift because they no longer can supply their own tax information, and the gift tax is only $10. Under current law, the only evidence required to confirm that the vehicle was received as a gift is the signature of the person making the gift. CSHB 2654 would require that the person making the gift be a relative of the person claiming the gift or that the recipient be a tax-exempt charity or heir.” [Texas House Research Organization, 5/11/09]

• HB 2654 Passed By Large Margin. Rep. Gallego voted “yea” on HB 2654, along with 136 other state legislators. 12 state legislators voted “nay.” [Texas House Journal, 5/12/09]

HB 893 Would Have Added $5 To Car Registration Fee To Pay For Underfunded Trauma Centers. From the Houston Chronicle: “A survey by Amir Dan Rubin, assistant vice president of operations at Memorial Hermann, revealed that the top 10 trauma centers in the state, including Memorial Hermann and Ben Taub, lost an average of $20 million per fiscal year in their emergency operations. Trauma injuries, mostly from motor vehicle accidents, bicycles, falls or industrial accidents, remain the leading cause of death in persons under 34 years of age, Rubin said. Traffic and other accidents cause 93 percent of trauma cases while only 7 percent are from violence, said Dr. Guy Clifton, chief of neurosurgery at Memorial Hermann. […] At the same time, one in three Houston-area residents are uninsured as well as one in three in Dallas. Those unprotected cases leave a statewide shortage of at least $200 million in emergency care, Clifton said. […] An even faster partial solution in Texas could be a legislative bill sponsored by state Rep. Juan Hinojosa, D-McAllen, to add a fee on the motor vehicle registration to go to fund trauma centers. Clifton testified in Austin last week before the House Committee on Transportation to support House Bill 893. […] The bill would add $5 to the annual cost of registering a motor vehicle. Under the provisions of the bill, appropriations from the revenue could be made only for the Texas Department of Health to support trauma centers. With the current 17 million cars that are registered, the new law could raise $85 million, or almost half the losses suffered by trauma centers in the state.” [Houston Chronicle, 3/26/01]