NYTimes.com Article: A Texas Bid to Shift School Finances to 'Sin Taxes'

The article below from NYTimes.com
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Dear Everyone;

The Governor of Texas is proposing to use "sin taxes " to fund schools. He wants to cut property taxes and make up the shortfall with higher taxes on cigarettes, alcoholic drinks and a head fee on patrons going to topless bars.

Other states already do have some hefty sin taxes as a way to avoid increasing " real taxes ". No where is there any mention of the states trying to cut their spending so they won't have to increase any kind of taxes.

Ron Getty
SF Libertarian


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A Texas Bid to Shift School Finances to 'Sin Taxes'

April 21, 2004

AUSTIN, Tex., April 20 - How much money Texas spends to
teach children reading, writing and arithmetic may soon
depend in part on how successful women like Vanity, Destiny
and Rio of the Yellow Rose, a topless bar in this state
capital, are in attracting customers.

Gov. Rick Perry called the Legislature into special session
Tuesday to change the way public education is financed in
Texas. He wants to give billions of dollars in property tax
reductions to the most affluent homeowners while making up
part of the revenue loss through a vast expansion of legal
gambling, increasing cigarette taxes by $1 a pack, raising
taxes on alcoholic drinks and collecting a tax of at least
$5 each time a patron enters a topless bar.

The governor's plan faces an uncertain future, but it seems
likely that Texas will adopt at least some of his "sin tax"
proposals. Mr. Perry is a Republican, and Republicans have
comfortable majorities in both houses of the Legislature.

The idea that the education of future generations should
depend on increasing sin taxes is not unique to Texas.
Across the country, politicians, eager to avoid anything
that looks like a tax increase, are turning to levies on
what Governor Perry calls "unhealthy behaviors" to finance

Kentucky, Maryland, Missouri, Tennessee, Utah and West
Virginia are among the states that have shifted part of the
cost of schooling from income, sales and property taxes to
levies on gambling and nude or topless dances in the last
few years.

Other states are considering such plans, including New
York, where Gov. George E. Pataki is promoting more
gambling to raise $2 billion annually for public schools,
like making video lottery terminals more widely available.

"What we are seeing is renewed interest across the states
in taxing vices," said Bert Waisanen, a tax policy
specialist at the National Conference of State

These efforts illustrate how the antiquated systems the
states rely on to raise revenue are failing to generate
enough to finance basic government services, a trend
aggravated by growing sophistication among the wealthiest
individual and corporate taxpayers in escaping state
levies. In Oregon, for example, most major businesses pay
only the $10 minimum corporate income tax each year.

The trend toward raising sin taxes, and allowing more
behavior that brings in such taxes, comes as elected
officials are under pressure to sign pledges that they will
never vote to raise taxes. Such pledges are being promoted
by antitax groups like the Club for Growth, which have
worked to make "tax" a word so vile that many officials
would rather make gambling as convenient as buying gasoline
and have the state keep count of topless-bar customers than
consider fundamental changes in its tax structure.

The sin taxes are often sold as if they are not really tax
increases at all. In a presentation to a legislative
school-finance committee, Governor Perry spoke of tax
relief, tax cuts and rewards on Monday, but never of tax

When State Senator Steve Ogden, a College Station
Republican, asked Mr. Perry if the proposed levies on
gambling, nicotine, alcohol and topless bars as well as
some other provisions were in fact "tax increases," the
governor replied, "I consider this shifting off property

The governor's plan is intended to end a system, known as
Robin Hood, that takes property tax revenues from wealthy
school districts to help finance education in poor ones. It
would also close a loophole, similar to one in many other
states, that allows companies to escape state taxes by
having their assets owned by shell companies in Delaware.

Opponents of the plan say the sin-tax strategy has many
flaws. Such taxes are not a reliable source of income, the
critics argue. When times are bad, most people will pay
their property taxes, but they may cut back on trips to
topless bars. The critics also say that such taxes
encourage government to expand industries that prey on bad
behavior and that they are regressive because lower-income
people tend to spend more of their money on such

In Texas, Carole Keeton Strayhorn, the state comptroller,
is opposing Governor Perry's proposals, saying that his
plan replaces Robin Hood "with robbin' everyone."

Homeowners would get less than half the $418 average annual
property tax cut the governor promised, Ms. Strayhorn said,
adding that the revenue raised by one-time accounting
changes and sin taxes would be $10 billion less than the
property tax revenues the state would lose over the next
five years.

The governor's press secretary, Kathy Walt, noted that Ms.
Strayhorn, while a Republican, was a rival of the governor
and said her analysis relied on "fuzzy math."

While Mr. Perry presented himself as a proponent of more
spending on education, the Texas budget for this year and
next cuts general-fund spending on kindergarten through
high school education by 4.2 percent and reduces spending
from dedicated state funds by 33.5 percent. Those cuts
totaled $893 million at a time when a state commission said
Texas needed to increase spending on education by $4
billion annually if most children were to get an education
sufficient to prepare them to attend college.

Total state spending on education did rise by 2.7 percent
to $33.8 billion over two years, but only because of a $1.2
billion, or 22 percent, increase in federal school aid.

F. Scott McCown, who as a state judge tried three major
school finance lawsuits in Texas between 1990 and 2002,
said there was simply not enough sin in America for sin
taxes to finance education. But even if there were, Judge
McCown said, it was unwise to be "building your school
system on sand instead of building it on rock."

"There is a difference between taxing sins you have already
made legal and in making new sins legal so you can tax
them," he said, noting the expansion of gambling proposed
by Mr. Perry, including selling state lottery tickets at
gasoline pumps.

The governor's plan, Judge McCown said, involved "taking
society's most important function, educating children, and
financing a significant amount of it with sources of tax
money that are volatile, unreliable and over time

Most states, the judge said, rely on a three-legged stool
of taxes: levies on income, sales and property. Texas does
not have an income tax, he noted, and by lowering property
taxes, "the governor is trying to run the state on a tax
and a half."

A tax on admission to topless bars is just fine with two of
the three dancers at the Yellow Rose, which is in a
brightly painted cinder block building in a neighborhood
marked by derelict automobiles and failed retail stores.
The dancers would give only first names.

Vanity, 26, who said she expected to start a new job as a
United States marshal within days, said she was "all for
more school funding."

Destiny, 23, a mother of two, said that an admission tax
would not reduce demand for her services because "men are

But an older dancer saw it differently. Rio, 32, a mother
and homeowner who said she had a bachelor's degree in art,
said she was appalled by the governor's proposal. She
characterized it as immoral because it linked "adult
entertainment" with school children and because she saw it
as a tax increase on the women like herself, who she said
lack political influence.

"This is the lowest thing they could do," Rio said. "The
governor wants to give the owners of the biggest houses a
tax break and he wants women who have to take their clothes
off for money to pay for it."


Does anyone know if sin taxes have ever been challenged on constitutional grounds? It seems to me that, particularly in the case of taxing strip clubs, they are violating the first amendment.

-- Steve