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Texas Governor Vaults Onto the National Stage With Dramatic Tax Plan

He has two Ivy League degrees, a considerable fortune, and a name that opens doors across the world. Two years ago, he was a political novice who'd never held elective office. Today's he's poised to become the first Texas governor to win reelection since 1974. With so much going for him, it seems unlikely that George W. Bush would choose this moment to stick out his political neck. But that's exactly what he's doing.

In the coming months, Texas lawmakers will consider Governor Bush's ambitious plan to revise the state's antiquated tax code - cutting some forms of taxation and raising others to make the system more equitable. If it passes, it will be a shocking development in a conservative state where governors have little real power, and any talk of implementing new taxes - especially coming from a Republican - is about as common as a cool day in August.

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Not only does the tax debate have huge economic implications for the nation's second-largest state, but its outcome could determine whether Bush's political career ends at the governor's mansion here, or in Washington, D.C., at his father's former address.

"If he pulls this off, it'll be the biggest political coup in Texas for decades on end," says Walter Dean Burnham, a political scientist at the University of Texas. "On a national level, he'll be an attractive choice for the Republican ticket."

In an interview in his capitol office, the governor acknowledged that his tax battle would likely draw national attention, but he balked at any suggestion that he's positioning himself for a presidential bid.

"I really don't spend a lot of time trying to figure out where I stand in the national scene," he says, reclining in his desk chair on a dark, drizzly morning. "You may think I'm trying to be coy, but I'm not. I've got a lot to do."

Indeed, there isn't much room on the governor's calendar. Ever since he unveiled his tax plan last month, he's been spending his own campaign funds crisscrossing the state in an attempt to visit each of its 23 media markets more than twice. When he's not on the road, he's herding lobbyists and legislators through his office to hear his pitch.

Tax code overhaul

By all accounts, the state's tax code needs an overhaul. Texas has no personal income tax and collects relatively little revenue. Property taxes have nearly doubled in the last 10 years, driving down housing prices and prompting loud complaints from homeowners.

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The state relies on property taxes for 55 percent of its education budget. As a result, schools are often strapped for funds, and rich districts are required by court order to subsidize poorer ones.

In addition, much of the state's revenue comes from taxes on the petrochemical industry, which has been declining in importance here for 15 years.

The Bush plan would cut property taxes by $2.8 billion and increase the homestead exemption (the amount subtracted from the taxable value of a home) from $5,000 to $25,000.

To make up for the shortfall, Bush wants to increase the state sales tax from 6.25 to 6.75 percent and install a new business tax aimed at doctors, lawyers, accountants, and other types of professionals.

The goal, Bush says, is to reduce the burden on homeowners and create a more equitable system for funding schools. It's an ambitious reform for any governor, but it's especially awkward for an ardent conservative.

"I admit Republicans don't like to talk about taxes. I don't [like to] either," he says. "But if we're going to have taxes, we ought to have a fair system where it's not a few paying a lot and some paying nothing."

At a time when Texas is trying to lure more high-tech industries, Bush adds, the state's burgeoning school enrollment and its illiteracy problem are becoming serious threats. "The idea of preparing a work force in engineering and science is moot if people can't read," he says.

But the tax plans' road to passage is littered with obstacles.

The two most powerful figures in the legislature, House Speaker Pete Laney and Lieutenant Governor Bob Bullock, are Democrats. Although Bush has cultivated relationships with both men and managed to enact juvenile-crime, welfare, and tort reforms in the last session, his tax package is a horse of a different color.

Not only is it the most complex piece of legislation most lawmakers here have ever seen, it's vulnerable to attacks from every political quarter. Liberals oppose raising the sales tax. Conservatives are wary of the proposal's new business levies. And educators want assurances that the new school funding mechanisms won't fall short.

A lot to swallow

For Texas lawmakers, who only meet once every two years, it's a lot to swallow. Unless Bush can persuade enough of them to assume some of the political risk, it's unlikely that the people of Texas will see any significant tax reform in the near future.

"By the end of this debate, [Bush] will have spent all of his personal energy," says Sam Kinch, publisher of Texas Weekly and the dean of the Capitol press corps. "If it all goes down in flames, I won't be surprised if he doesn't run for reelection."

If Bush does decide to drop out of politics, he'll surely have a soft landing. Before running for governor, he served as managing partner of the Texas Rangers, a major-league baseball club that won its division last year. His name has also surfaced as a top contender for commissioner of baseball.

Yet even if his tax package falters, it's hard to believe that anyone, particularly somebody named George Bush, could ignore polls that routinely placed them among the top contenders for their party's presidential nomination in 2000.

At the moment, however, the governor is not trafficking in idle speculation.

"There's a time for politics and there's a time for policy, and now's the time for policy in our state," Bush says with a cryptic smile. "I think it's a good time to enact some structural changes in Texas. I really don't care what the political consequences are."

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