Words tax on tax sheets
New Texas laws regulating major companies are worrying small government advocates. A low-tax group is concerned Texas may be losing its low-regulation reputation with new rules on banks, insurance companies, social media giants, and other businesses.
State lawmakers have shifted in their ideology along with the Republican party. The Bush-era hands-off approach to business is slowly being replaced by people who are more comfortable using government in cultural and social issues. If companies shift money away from fossil fuels, gun manufacturers, and “key Texas industries” – the state may look into it.
Senate Bill 13 became state law in 2021 to encourage businesses to stay away from environmental, social, and corporate governance (ESG). The comptroller now maintains a list of companies that limit commercial relations with the fossil fuel industry, boycott Israel, or stay away from gun manufacturing.
The National Taxpayers Union advocates for low taxes and less regulation. Their executive vice president, Brandon Arnold tells Lone Star Politics, “They’re trying to put their ideological viewpoint basically into statute and force the state to stop doing business with companies where they have political or cultural disagreements.”
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A recent example has been state scrutiny of several companies who joined the Net Zero Banking Alliance, a group connected to the United Nations that aims to promote green energy and eventually scale back from large-scale emissions scientists say lead to climate change and sea level rise.
Companies like BlackRock, UBS and JPMorgan Chase have invested billions over the years in oil and natural gas companies but also invest in renewable energy as it’s become more popular.
“At the end of the day, some of those bets are going to pan out. Some of them aren’t,” said Arnold. “It should be left to the free market.”
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Some state leaders argue that it is a slippery slope toward boycotting the fossil fuel industry. In an announcement that Barclay’s was not eligible to join the Texas bond market, Attorney General Ken Paxton wrote he will “continue to vigorously enforce our laws that prevent taxpayer funds from going to companies whose ‘ESG’ policies harm Texans or key Texas industries.”
Late last year, Citigroup left the municipal bond market in Texas after scrutiny by the Texas Attorney General. One less company offering bond services to cities, counties, and other public entities may lead to higher rates and higher prices for taxpayers looking to build major projects like hospitals, roads, and schools.
The Texas AG argued the company boycotted gun manufacturers when it rolled out new rules in 2018 on how it invests in the industry.
“They’re overshooting the mark here dramatically when they start interfering in their private businesses,” said Arnold.
The National Taxpayers Union sees Texas taking similar tactics to California, pressuring companies to take certain actions based on politics.
JPMorgan and State Street left another climate-friendly investment coalition over the new laws earlier this year.
Monday, the United States Supreme Court heard arguments over the Texas law which limited how much moderation social media companies can do. After the Jan. 6, 2021 riot at the capitol, Meta, then-Twitter, and other social media companies removed former President Donald Trump, arguing he incited some of the violence. That led state lawmakers to pass a law banning social media “censorship.”
While the state argued social media companies should be treated like common carriers and can be regulated like internet providers and cell phone companies. An industry group, NetChoice, argued the state was infringing on the First Amendment rights of the private companies and compelling them to publish certain comments on their platforms. The Supreme Court is expected to rule on the state law later this summer.
