| As Rick Casey points out the Baylor law student is hardly typical. Nikki Laing is a 35 year old mother who successfully built a small business. Ms. Laing also scored in the upper ten percent of the Texas CPA exam before entering law school.
I'd say this talented lady will be a formidable force in the legal profession. Rick Perry had better take notice because Ms. Laing's findings are gaining notice and recognition.
And her article about the new margins tax won a $1,000 prize for the best law review article this year at Baylor. It's already been posted on a couple of websites for professionals, where it has ranked in the top 10 for hits.
Ms. Laing asserts that Governor Rick Perry passed an income tax without giving the people of Texas an opportunity to vote on it.
The Texas Constitution includes an amendment requiring that a statewide vote of citizens to pass an income tax on individuals, including income they receive from partnerships and unincorporated associations. The law establishing the margins tax was enacted without a vote of the people and taxes partnerships and other unincorporated businesses.
Ms. Laing certainly did her homework on this issue. When one reads the entire article it will become clear. My question is why did it take a law student to discover the potential unconstitutionality of one of Perry's tax laws?
Who benefited the most from Perry's business tax?
Winners might include the following.
Capital intensive businesses - oil and gas for example - could profit from the property tax reduction enough to see a net decrease in Texas taxes.
Businesses that can take advantage of the passive entity definition under combined entities could also be winners. Oil and gas also could do well in this category since royalty interests and non-operating working interests in mineral rights are not treated as active.
Manufacturers may be better off than service companies because of the cost of goods deduction method.
Wholesales and retailers have the advantage of the lower tax rate.
As we all know, when there are winners there are also losers.
The losers.
Service companies are the biggest losers. (Especially since some of them were exempt under the franchise tax.) Lawyers, CPAs, and architects will pay more taxes. Doctors will also pay, but there are a number of large exemptions that will help them.
Companies with significant non-deductible costs will also suffer. Transportation and rental companies are examples.
It is nice to see in clear black and white just who Rick Perry and the Texas Republicans work for. It is also great to know that our State Attorney General's office was apparently asleep at the switch when Perry enacted an income tax without putting it to a vote by the people.
Fortunately with up and coming attorneys like Nikki Laing it will become more difficult for future politicians like Rick Perry to get away with their potentially illegal and unconstitutional schemes. It will also be more difficult for complicit and complacent State Attorney Generals, like Greg Abbott, to turn a blind eye to arrogance, corruption and incompetence.
It is well past the time for the people of Texas to show Rick Perry and Greg Abbott to the door. |
