Elimination of the recapture system without any replacement would probably violate the Texas Constitution as per the current case law. It would also create a large deficit in the funding for public education. Elimination of the current financing scheme would provide some taxpayers with property tax relief. However, it would do so at the expense and to the detriment of future generations. Consequently, other revenue must be generated in order to offset the loss of Robin Hood funds. For example, the Legislature could amend the current tax structure to close loopholes and thus bring new revenue into the system.

Perhaps the most commonly discussed plan to make up revenue lost by elimination of Robin Hood is an increase in the sales tax. Proposals include increasing the current state sales tax rate (currently at 6.25%) and broadening the tax base. Currently, the sales tax applies to items such as clothing, office supplies and compact discs. With the sales tax system in place today, Texas citizens are paying an average of $1,275 per resident.92

The Comptroller of Public Accounts provided a list of goods and services currently excluded from the sales tax. The list can be found in this report as Appendix D. Elimination of any of these exclusions and the corresponding imposition of a sales tax on any of these items would constitute a broadening of the sales tax base.

Medical services, including dental services, are projected to generate $1,173,000 in revenue if subject to the sales tax.93 Non-medical services and professional services would generate $6.5 billion.94 Broadening the sales tax to include food (such as food for home consumption and school lunches) would generate an estimated $1,367,000.95 Expansion of the tax could also result in taxes on medicine and services such as child day care and funerals.