House Resumes Debate on $10.8 Billion Tax Bill

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AUSTIN -- Texas businesses would pay taxes on payroll or capital. And consumers would pay more sales tax under a $10.8 billion school property tax relief bill that lawmakers are debating today.

The sweeping bill is part of a package to overhaul the way Texas pays for public schools. The bill would cut property taxes by one-third.

The House approved education changes last week. But the tax bill faltered as lawmakers tried to analyze the impact of a last-minute change offering employers an option on how they pay taxes.

The original bill would have required all businesses to pay a 1.15 percent tax on wages. But some lawmakers worried that the plan relied too heavily on large employers, so today, they added the option of letting businesses pay the current franchise tax -- 4.45 percent of net income or point-two-five percent of capital -- instead of the new payroll tax. Most businesses now avoid paying the franchise tax through loopholes. Those loopholes would be closed by the measure. Most Texans would see their tax burden increase under the plan.

Republican House Speaker Tom Craddick says he expects the chamber to continue debate late tonight and be ready to vote by tomorrow afternoon.