April 7, 2006

Austin American-Statesman Bennett:
For the good of Texas, let's pass tax reform

Tony Bennett, Texas Association of Manufacturers

The people in manufacturing know that to make a good product, all of the moving parts must be well-oiled and coordinated. As such, manufacturers have a special appreciation for the task confronting the Texas Legislature when it convenes this month to reform the state's tax system.

Like any fine-tuned machine, all of the moving parts of the State of Texas – lawmakers, citizens and businesses – will need to work together to produce a quality product and reform our tax system to support our education system.

The Texas Tax Reform Commission recently unveiled an innovative tax proposal that goes far in getting this process started, and its plan maintains the kind of business climate that has made Texas a national stand-out.

The Texas Association of Manufacturers supports the proposal's broad-based, low-rate tax system because it taps into Texas' diverse business economy – ensuring that all businesses do their part in funding education for our state's future workforce. The commission crafted a sustainable, forward-thinking plan to provide for Texas schools and help improve the Texas economy, and it's unlike anything we've seen when lawmakers have tackled tax reform in the past.

As groups from across the state converge on Austin later this month to make their voices heard, all businesses should be committed to paying their share to finance our schools because we are all consumers of the most important product of our public school system – the future workers of Texas. Since manufacturers employ more than 890,000 Texans, we are especially interested in making sure students come out of school prepared to succeed. And we are doing our part to be sure high quality manufacturing jobs are waiting for them.

These jobs are among the best in Texas. On average, manufacturing workers take home paychecks that are 22 percent higher than the national average. Manufacturing compensation averages more than $63,000 a year, the highest in the private sector, and manufacturers lead the way in employee training and employee benefits.

The economic ripple effect of manufacturing is just as impressive. Studies show that four service jobs are generated for every new manufacturing job. And every $1 in manufacturing activity generates an additional $1.43 worth of economic activity – more secondary impact than any other economic area.

In recent years, Texas has surpassed California as the nation's largest exporting state. According to government surveys, the vast majority of Texas merchandise exports are manufactured goods. The Texas economy and our workers rely on a healthy, robust manufacturing sector that can compete both domestically and globally. More and more, competitive pressures from the global economy are immense for manufacturers. Consider that the average manufacturing worker in China earns 61 cents an hour. In the United States, manufacturing workers earn an average of $16.42 an hour. Numbers like that make competing in the world economy tougher than ever.

Outsourcing important business segments and tapping into low labor costs abroad are enticing options for companies struggling to compete, which is all the more reason we need smart public policies to promote economic growth and job development here at home.

With the special legislative session coming on April 17, Texas manufacturers welcome a seat at the table to discuss important changes to our tax system. Since manufacturing is a cornerstone of the Texas economy, TAM's efforts will not be shortsighted or short-lived. Our long-term focus will include the creation of reliable, competitive energy sources; safe, efficient, cost-effective transportation of goods; water management; and the promotion of transparent, science-based, predictable regulations – all of which will foster job growth, competitiveness and productivity in manufacturing.

Across the United States, we're seeing manufacturing jobs dwindling to their lowest point since 1950. Texas manufacturers want to ward off the trends we're seeing nationally and keep manufacturing jobs in Texas on the right track.

With our first challenge before us, manufacturers are hopeful that the business community, our lawmakers and our leadership will be able to work together to reform our tax system. Our hope is that we'll be able to coordinate our state's moving parts into a smooth process that will create a quality final product – a fair, reliable, sustainable tax system – that we can proudly say was made in Texas.

Bennett is the chairman of the Texas Association of Manufacturers.