Corporate Tax Breaks Should Be Stopped

The state of Texas has one of the most regressive tax systems in the United States. Most of the state's funding is derived from a sales tax (where the working class and middle class pay a much larger share of their income than the rich do). And while the working and middle classes bear the brunt of state taxes, corporate entities enjoy billions of dollars in tax breaks. It has been this way in Texas for a long time.

One example of this is the tax exemption created back in 1989 for the gas drilling industry. The exemption was intended to encourage gas drillers to develop methods for getting at hard-to-get underground gas deposits, and it has been very effective in doing that. Methods were developed and an immense amount of this drilling is taking place. These companies are making incredibly large profits now and still are paying very little in taxes.

It is estimated that this tax exemption has cost the state of Texas $7.4 billion in just the last six years. In 2011, the state will lose about $962.5 million in taxes due to the exemption. This loss, in conjunction with the record profits being shown by the gas drillers, has some state legislators wondering if it is time for the drilling companies to start paying their fair share of taxes -- especially in light of the $27 billion budget shortfall being currently faced by the state.

State Senator Wendy Davis (D-Fort Worth) said, "Before we ask our schoolchildren in Texas to sacrifice in the education area because of the budget deficit, we need to ask whether this antiquated tax exemption can be justified. If the purpose of the exemption -- to stimulate investment in the oil and gas arena -- no longer exists, shouldn't it be re-examined?"

State Rep. Lon Burnam (D-Fort Worth) is even more blunt. He said, "I think that one (exemption) should be closed. They don't need the incentive to invest."

But note that both of those legislators are Democrats, and Democrats are in a very small minority in the Texas legislator. Texas Republicans are not going to tax their buddies in the oil and gas industry. I doubt if a bill erasing this exemption could even get out of committee, let alone get a vote on the floor of the House or Senate.

And that is just one example. Texas Republicans have a long history of giving tax breaks to corporations. There is little doubt that the budget deficit could probably be covered by just requiring businesses to pay their fair share of taxes -- the same as they would be required to pay in other states. But don't hold your breath for that to happen. Texas Republicans don't mind balancing the budget on the backs of the poor, the workers, and the middle class, but they would never tax a corporate entity.

The corporations are making huge profits and paying few taxes, and they are repaying the state by creating no jobs. It's time (actually past the time) to make them pay their taxes. Unfortunately, that's not going to happen.