THE BAD IDEAS

Tax on services : Another bad idea

A tax on professional services is another approach to school finance. During the regular session of the 78th Texas Legislature, the Senate passed a tax-on-services bill for public education funding. It would have taxed virtually all professional services in the state – such as accounting, legal, real estate, hair salons and even advertising.

This proposal would have increased the state portion of the sales tax from the current rate of 6.25% to 7.25%, and expanded the state sales tax to all services except medical and dental. Add in local taxes, and consumers would pay a 9.25% sales tax in many parts of Texas.

A tax on services, like a real estate transfer tax, would significantly raise the amount of money that Texas families would have to come up with to buy a home.

Background information
	Public School Finance Reform - The Effect of Taxing Real Estate Services
	Study of Alternative Tax Plans For Public Education in Texas