A Primer on Gross Receipts Taxes

ISSUE BRIEF 01.09.18 A Primer on Gross Receipts Taxes

Joyce Beebe, Ph.D., Fellow, Center for Public Finance

Ask any economist about the gross receipts Washington named its GRT as the business tax (GRT) and you are likely to get a frown and occupation (B&O) tax, and Nevada’s GRT of disapproval. However, in 2017, four is the commerce tax. New Mexico has a GRT, states—Oregon, Oklahoma, Louisiana, and but its characteristics are more similar to a West Virginia—sought to enact a statewide broad-based sales tax.3 GRT. Although none of the proposals was Typically, states impose a GRT as a implemented, Oregon has indicated that it privilege of doing business in the state. might propose creating a GRT again in the In its most general form, the base of the next legislative session,1 and West Virginia’s GRT comprises the receipts from all sales proposal was approved by the legislature but of goods and services, and applies to all ultimately not enacted.2 businesses within a state. A GRT does not In Texas, the franchise tax, a hybrid provide allowances for costs incurred by form of the GRT, has been the subject of sellers or offer exemptions to particular several lawsuits. For example, the Texas types of sales. Business entities simply Supreme Court in September heard oral apply a single tax rate to the sales receipts arguments for a case in which the petitioner to calculate the taxes owed.4 None of the claimed that the 10-year-old franchise tax is current state GRTs fit squarely into this actually an income tax. The unpopularity of description—they either exclude certain the tax is widespread, leading policymakers types of sales or entities, tax different to propose repealing it; however, such businesses at different rates, or allow States considered GRTs efforts were unsuccessful in the 2017 various deductions. to generate revenue, legislative session. How can we explain that The recent proliferation of GRT proposals enhance business four states that do not have the GRT are is not new. Several states went through seeking to enact it, while Texas is trying to similar exercises in the early 2000s; New competitiveness, or repeal the GRT? What led to these seemingly Jersey, Michigan, and Kentucky even implement alternatives conflicting trends? passed state laws adopting a GRT, but they to the administratively were later repealed.5 In the first decade burdensome state of this century, states considered GRTs corporate income WHAT IS A GRT AND WHAT HAS to generate revenue, enhance business CAUSED THE RECENT SURGE OF competitiveness, or implement alternatives tax (CIT). STATE GRT PROPOSALS? to the administratively burdensome state corporate income tax (CIT). Similar Five states (Ohio, Texas, Delaware, objectives drove the 2017 wave of GRT Washington, and Nevada) currently have proposals—all four states have budget a statewide GRT. Besides Delaware, these deficits, and additional revenue is crucial. states do not explicitly refer to the tax They also need to reform their states’ as a GRT—Ohio refers to the GRT as the outdated tax systems to match current commercial activity tax (CAT), Texas calls economic realities. In some ways, states the state GRT a franchise tax or margin tax, may find it easier to tax services by enacting RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 01.09.18

a GRT than by expanding the existing sales production inputs; in this case, the payment or income tax base. The GRT also seems is for public services instead of land or labor. easier to understand and explain than other Unless a certain industry or type of entity taxes. Additionally, the GRT’s misleadingly benefits from such services differently Business taxes are low statutory tax rates are more acceptable than other types of industries or entities, imposed to reflect at first glance, despite the hidden all businesses should be taxed uniformly pyramiding effects that lead to higher regardless of profitability, nonprofit status, the true costs of a effective tax rates (ETRs), as discussed in the or charitable functions. However, although business’ activities. next section. theoretically true, this generalization Certain costs generated Several states originally based their GRT is not widely applied by legislators and by businesses (such proposals on Ohio’s CAT. What makes the businesses in practice. People tend to react as air and water Ohio CAT an attractive version of the GRT negatively toward taxing businesses that is that it replaced more unpopular taxes operate at a loss or serve as nonprofit or pollution) and costs of and has a broad-base, low-rate structure. charitable organizations, even if they do use government services Specifically, the CAT replaced the state’s government services. that businesses benefit franchise and personal property taxes in Business tax instruments generally from are not fully or 2005. Many residents believed that the include the CIT, GRT, and value-added tax franchise tax was subject to excessive tax (VAT),8 which are discussed below. voluntarily reflected avoidance planning and did not generate in their financial sufficient revenue, while the personal VAT statements. property tax on businesses was viewed as Many economists agree that a VAT is detrimental to the state’s extensive but more efficient than other business taxes. fragile manufacturing base. In contrast, the From a benefits-received perspective, CAT has a broad base that approximates external costs generated and government a standard GRT in that it does not allow services used by businesses are roughly deductions for the costs of goods sold proportional to the incremental value 6 (COGS) or other expenses. The tax base also created by business entities at each stage includes the rapidly growing service sector, of operations, which is precisely the VAT’s which was not covered under the previous measure of economic activity.9 tax system. The CAT rate is 0.26 percent, There are several alternative structures which is relatively low, for businesses with for a VAT. The income-based VAT taxes the gross receipts of over $1 million. sum of different forms of income, including labor compensation, rental payments, interest payments, and profits. The base of ECONOMISTS’ VIEWS OF THE GRT a consumption-based VAT is the difference Economists generally agree that business between a firm’s sales and its purchases taxes are imposed to reflect the true costs from other firms. The tax bases under of a business’ activities. Certain costs these two methods can be constructed to generated by businesses (such as air and be similar to each other, while the major water pollution) and costs of government difference is the treatment of capital services that businesses benefit from (such assets. A consumption-based VAT allows as education, transportation, infrastructure, businesses to expense capital purchases, public safety, fire, the judicial system, whereas an income-based VAT replaces etc.) are not fully or voluntarily reflected expensing with deductions for depreciation, 10 in their financial statements.7 Business similar to a standard income tax. Finally, taxes therefore incorporate these costs into tax filing is reasonably straightforward, business operations. especially for an income-based VAT, This principle implies that as long as because many components can be pulled 11 the entities benefit from governmental from federal tax returns. services, they should pay for them. From Similar to the GRT, a VAT is levied at each this perspective, paying business taxes stage of operation, but it differs from the is viewed as similar to paying for other GRT in that it allows deductions of all inter- 2 A PRIMER ON GROSS RECEIPTS TAXES

firm purchases at each stage. The net effect (1.6 times pyramiding) for the retail is the same as taxing the full value of goods trade industry to 3.2 percent (1.5 times and services at the time of final sale, and pyramiding) for electric, gas, and other there are no repetitive taxes for inputs used utility industries, with wide variation in ETRs in earlier stages of production. and pyramiding across industries. Certain industries such as food manufacturing GRT have an ETR of 2 percent but pyramid 6.7 The GRT is viewed as a bad tax primarily times. The average statewide ETR for all because of “tax pyramiding.” Pyramiding industries is 1.5 percent, which translates to 15 occurs when products and services are 2.5 times pyramiding. Some economists taxed each time they are purchased and view these results as large distortions, while sold by subsequent firms during the others interpret the results from a tax rate production process.12 The tax thus becomes differential perspective and indicate that the 16 part of the base in each subsequent sale, pyramiding is modest. and final purchasers pay a higher tax In principle, tax pyramiding can be fixed because of the repeated taxation of the by exempting the sale of intermediate goods same inputs.13 Because of the lack of and services from the GRT base, with the deductions for business-to-business (B2B) trade-off being reduced revenues, increased sales and the repetitive tax levy at each complexity in taxation, and conversion of stage of production, the effective tax rate the GRT to a tax that bears characteristics (ETR) on final sales under the GRT is not only of other tax instruments. This begs the higher than the statutory rate, it could also question of why the alternatives are not be different for similar goods, depending implemented in the first place. For example, on the number of taxable intermediate taxing only the value-added portion at transactions in the production/distribution each production stage instead of the full process. The more times the products value of the good or service makes the The GRT is viewed as change hands across entities, the higher GRT resemble a VAT. Lawmakers who a bad tax primarily the ETR. In addition, ETRs also increase if propose a GRT are well aware of the issue of pyramiding and generally try to fix it either because of “tax value adds happens earlier in the production pyramiding.” process because there are more stages for by offering tax credits or exemptions to the tax to cascade. industries with high levels of pyramiding, Pyramiding occurs One consequence of pyramiding is or by implementing differential tax rates for when products and 17 that it provides an incentive for vertical different economic sectors. services are taxed One thing to note is that although integration, which creates a bias against each time they are small firms that might otherwise provide pyramiding is the GRT’s major flaw, services to larger entities. Over the it is not unique to the GRT. Certain purchased and last decade, U.S. firms have become states that impose retail sales taxes on sold by subsequent increasingly specialized and hence B2B transactions also face the risk of firms during the pyramiding. For example, about 35 percent vertically disintegrated. If this trend production process. enhances productivity, some observers of Connecticut’s 2014 retail sales taxes argue that a tax system that goes against came from B2B transactions, which are 18 it would tend to depress growth.14 As such, taxed at 6.35 percent, totaling $1.4 billion. based on the benefits-received principle, New Mexico’s “GRT” taxes B2B transactions the phenomenon of pyramiding may alter but provides “chain of commerce” gross receipts to the extent that it is not a deductions similar to those under a VAT. A good proxy for the external costs generated study estimated that about 32 percent of by businesses. GRT revenue collected by the state, which What is the impact of GRT pyramiding? was about $748 million in 2005, came from The limited studies available on pyramiding pyramiding. The state’s pyramiding relief most commonly cite research referencing solved 36 percent of the issue, but also 19 Washington’s B&O tax. Its estimated gave up $427 million in revenue. effective tax rate ranges from 0.8 percent 3 RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 01.09.18

CIT There are four ways to calculate the taxable Despite its flaws, the GRT is viewed margin: total revenue times 70 percent, total as superior to the CIT by certain state revenue minus COGS, total revenue minus lawmakers for several reasons. First, the compensation, or total revenue minus $1 21 GRT includes more types of businesses— million. Texas has its own COGS definition, C-corp, S-corp, limited liability companies which generally includes all direct costs (LLCs), partnerships, etc.—in the tax base, related to the acquisition and production of as opposed to only C-corp in the CIT. The CIT tangible personal property and real property. tax base also has been shrinking because The modified franchise tax has been of the increasingly popular LLCs, which has subject to much criticism since it was signed 22 reduced the number of C-corp formations. into law. Its two major shortcomings are In addition, a GRT would tax service sector that it is complicated and has generated less businesses that are often organized in non- revenue than projected. The modified franchise From a structural perspective, the tax has been subject corporate forms and therefore are exempted from the CIT. franchise tax has hybrid characteristics of to much criticism From a tax rate and revenue the GRT and CIT, but retains the compliance since it was signed perspective, a broader tax base allows the and administrative complications of the GRT to have lower tax rates than the CIT. CIT. Because of its marginal tax component, into law. Its two major there has been debate about whether it is shortcomings are that Because the taxable entities are not limited to profitable corporations, the GRT tends to an income tax or a GRT. In 2006, Financial it is complicated and generate larger and more stable revenue. Accounting Standard Board (FASB) members has generated less The GRT also leaves fewer opportunities indicated that the franchise tax was an for tax planning because it applies to all income tax because it is based on a measure revenue than projected. 23 businesses and all receipts. Accounting of income, a view the Texas Comptroller’s to determine taxable receipts is less Office opposed. complicated and costly than accounting From a revenue perspective, the to measure taxable income. As such, franchise tax was projected to collect an administrative costs are generally lower estimated $6 billion before its enactment. under the GRT. The actual amount of revenue collected was $4.45 billion in 2008 and less than $4 billion in 2009;24 the annual revenue has TEXAS PERSPECTIVE been between $3 billion and $4 billion.25 The initial consensus was that the Great In 2005, the Texas Supreme Court Recession led to revenues being $1.5 billion declared the Texas school finance system short of projections. Moreover, the state’s unconstitutional and indicated that the revenue estimates were based on federal state-imposed cap on local property taxes tax data even though its COGS definition is for school maintenance and operations not necessarily consistent with the federal essentially converted it into a statewide definition. This imperfect match led to the property tax, which the Texas Constitution overly optimistic initial revenue projection. 20 explicitly bans. In response, Texas There have been numerous proposals lawmakers attempted to reduce the in recent legislative sessions to challenge, extent to which property taxes are used modify, or repeal the tax. In the 2017 regular to finance public education. They did this legislative session, H.B. 28 proposed a by substantially modifying the state’s franchise tax rate reduction that would franchise tax to bring in more revenue, be based on the cash balance of surplus with the additional revenues used to fund revenue available at the end of each fiscal schools. The modified franchise tax, also biennium, with the tax cut the lesser of the known as the margin tax, restructured the ending surplus or $3.5 billion per biennium. state business tax by replacing the taxable The franchise tax rate would ideally decrease capital and earned surplus components on a biannual basis, and once the adjusted with a new taxable margin component. rate reaches less than 15 percent of the

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current rate, the tax would automatically be addition to mandating a single factor of sales, repealed. Another proposal, S.B. 17, would Michigan’s 2014 amendment also imposed have reduced the franchise tax rate each a controversial clause to retroactively apply biennium, contingent upon state revenue the amendment, with an effective date of growth of 5 percent. Jan. 1, 2008.30 Despite the lower than anticipated Other recent lower court cases in Texas revenue collection, the franchise tax ranks involving the franchise tax are mostly as Texas’ third- or fourth-largest source of related to the calculation of COGS. Many state tax revenue. Some Texas lawmakers businesses, other than those in the service voted against the repeal or sunset of the industry, believe COGS offer more tax- franchise tax in the most recent legislative saving opportunities than other deductions, session due to the lack of replacement and many cases center not only on whether revenue. As undesirable as the tax is, given a taxpayer is entitled to claim COGS but that the franchise tax was intended to also what constitutes COGS. Because the finance the state’s share of public education definition of COGS under the franchise tax costs, eliminating it before finding alternative is not identical to the federal definition, the revenue sources is more unacceptable.26 state must defend its definition. Generally, If the state contributes less franchise tax the comptroller’s view of what constitutes revenue to fund public education, the share COGS is more limited than taxpayers’ of local property taxes is likely to increase. interpretations. The courts are therefore If property values in Texas continue to often brought in to decide how the definition increase, as they have been recently, should be applied. then eventually homeowners will become Autohaus LP filed a petition for dissatisfied with the rising share of property review with the Texas Supreme Court and 27 taxes in funding public education. requested a repeal of a Court of Appeals Regardless of which ruling that repair labor costs were not Texas court cases involved in the production of goods and as business tax a state The Texas Supreme Court recently heard such did not qualify as a COGS deduction. decides to implement, oral arguments in a case filed by Graphic The Court of Appeals pointed out that the tax should be a Packaging Corp., which contends that the the company bought the parts from third broad-based, low- parties and simply resold and installed franchise tax is an income tax.28 The issue rate tax that has is that, under the Multistate Tax Compact,29 these parts on customers’ vehicles. The business taxpayers could elect to apportion company, on the other hand, indicated limited pyramiding income using an equally weighted three- that the legislature defined “production” and does not create 31 factor apportionment formula based on to include “installation.” The petition is many tax avoidance currently pending. a business’ sales, property, and payroll. opportunities. However, the franchise tax essentially In May 2017, the Texas Third Court of compels businesses to use gross receipts Appeals rejected the state’s argument that as the single factor to apportion its income movie theater chain AMC cannot deduct film under this tax. In 2015, a ruling from the exhibition costs from its franchise tax base Texas Third Court of Appeals found that the because the company is not selling tangible compact’s income-apportionment provision goods. The Comptroller’s Office claimed does not apply because the franchise tax that showing films involves the provision is not an income tax. If the Texas Supreme of a service or intangibles, but not the sale 32 Court decides that the franchise tax is an of tangible goods. The court indicated income tax, in favor of Graphic Packaging, that AMC’s exhibition of movies to paying the company’s 2008-2010 taxes paid customers is properly considered tangible would be reduced by millions. Other states, personal property. The Comptroller’s Office most notably Michigan, experienced similar filed a petition for review in the Texas 33 challenges to state laws that resulted in Supreme Court in August 2017. amendments to the business tax, essentially repealing the Multistate Tax Compact. In 5 RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 01.09.18

Public opinion as to what is preferable CONCLUSION may also change over time. Michigan An increasing number of states are facing adopted a business activities tax—a type issues related to obsolete tax systems and of VAT—from 1953 to 1967, switched to a revenue shortages. Many states began tax CIT between 1968 and 1975, then moved overhauls by repairing the CIT and several are to a single business tax—an income-based exploring more fundamental tax reforms. VAT—from 1976 to 2007. From 2008 to From a mechanism design perspective, 2011, it used the Michigan Business Tax, a good business tax is 1) efficient, in that a type of GRT. Finally, Michigan switched it distorts the private sector as little as back to the CIT in 2012, which it has used 34 possible and mostly likely uses a broad- ever since. Thus, over the last 50 years, based, low-rate tax structure; 2) fair, Michigan experimented with all three types where similarly situated entities are taxed of business taxes. similarly; 3) generates sufficient revenue; Regardless of which business tax and 4) simple. a state decides to implement, the overarching characteristics that are desirable are clear: the tax should be a FIGURE 1 — COMPARISON OF BUSINESS TAXES AGAINST broad-based, low-rate tax that has limited ECONOMIC CRITERIA pyramiding and does not create many tax avoidance opportunities. After such a tax is enacted, states also need to avoid Criteria/Tax VAT GRT CIT the pressure to erode the tax base over time—either by offering concessions to Efficiency ü û û specific industries, excluding particular groups, or providing incentives for certain Equity ü û û activities. Without ongoing maintenance, the shrinking tax base will necessitate rate Revenue Generation increases to bring in the same amount ü ü û of revenue, and the modified tax may eventually look like the CIT today. Simplicity ü ü û ENDNOTES NOTE ümeans the tax meets listed criterion; û means the tax does not meet listed criterion. SOURCE Author’s own elaboration. 1. Maria Eberle and Nicole Ford, “Not Dead Yet: Oregon Voters Propose State business tax reform cannot another Gross Receipts Tax in the Wake happen in a vacuum. A state’s existing of Market-Based Sourcing,” July 31, 2017. business tax structure, economic climate, https://www.lexology.com/library/detail. industry concentration, and other state aspx?g=a851a212-6f97-4a37-887b- or local taxes all need to be considered. f3b1216287e7. Although most economists support the 2. West Virginia’s S.B. 484 passed both VAT, its transition costs and unfamiliarity the Senate and the House, but was not have been major obstacles to its successful included in the revised proposal during the adoption. A policy choice between the special session or in the final budget. See: GRT and the CIT may reflect what is more http://www.legis.state.wv.us/Bill_Status/ tolerable to state and local constituents bills_history.cfm?INPUT=484&year=2017&se and policymakers—a distortionary tax ssiontype=RS. that generates revenue, or the incumbent, 3. New Mexico’s GRT or non-statewide more complicated tax. What Figure 1 does GRTs (e.g., municipal level GRTs or GRTs not show is the intensity of public opinion that are applicable to limited types of regarding each criteria. expenditures) are not considered in this brief.

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4. Thomas Pogue, “The Gross Receipts tax rates due to pyramiding are the same in Tax: A New Approach to Business Taxation?” all sectors, then pyramiding causes no cost National Tax Journal Vol. LX, no. 4 distortions among taxed sectors.” (December 2007): 799-819. 17. Chamberlain and Fleenor, “Tax 5. Other states that proposed GRTs Pyramiding: The Economic Consequences in the early 2000s include Illinois, Maine, of Gross Receipt Taxes.” and Montana. 18. Ebel, Luna, and Murray, “State 6. It excludes nonprofit and government General Business Taxation One More Time.” entities. 19. New Mexico Tax Research Institute, 7. Pogue, “The Gross Receipts Tax: “Pyramiding Transactions Taxes in New A New Approach to Business Taxation?” Mexico.” 8. Some economists excluded the 20. Neeley v. West Orange-Cove I.S.D. general sales tax because it is only collected (Nov. 22, 2005). from businesses out of lower compliance/ 21. This option was effective on Jan. administrative costs considerations. 1, 2014. Certain qualifying entities can Individuals bear the burdens of sales tax. also choose to use EZ computation. See: 9. Pogue (2007) indicated that an https://comptroller.texas.gov/taxes/ income-based VAT is superior to the GRT, publications/98-806.php. but the GRT may not be preferable to a 22. Scott Drenkard, “The Texas Margin consumption-based VAT. Tax: A Failed Experiment,” Tax Foundation 10. For a detailed discussion of the VAT, Special Report No. 226 (January 2015). see George Zodrow, Texas Tax Options, Rice 23. Financial Accounting Standards University’s Baker Institute for Public Policy, Board, Meeting Minutes, Texas Franchise Houston, TX, January 2006, https://www. Tax, http://www.fasb.org/board_meeting_ bakerinstitute.org/research/texas-tax- minutes/08-02-06_texas_franchise_tax.pdf. options/. 24. Billy Hamilton, “The Tax that Fell to 11. Robert D. Ebel, LeAnn Luna, and Earth: Lessons from the Texas Margin Tax’s Matthew N. Murray, “State General Business Launch,” State Tax Notes 57 (2010): 671–675. Taxation One More Time: CIT, GRT, or VAT?” 25. Texas Comptroller of Public National Tax Journal 69, no. 4 (December Accounts, Annual Financial Reports, FYE 2007): 739-762. 2007-2016 https://comptroller.texas.gov/ 12. New Mexico Tax Research Institute, transparency/reports/annual-financial/. “Pyramiding Transactions Taxes in New 26. Ashley Goudeau, “Texas House Mexico: A Report on the Gross Receipts Tax,” passes bill to eliminate the franchise tax,” Albuquerque, New Mexico, September 2015. KVUE.com, April 28, 2017, http://www. 13. Ebel, Luna, and Murray, “State kvue.com/news/politics/texas-house- General Business Taxation One More Time.” passes-bill-to-eliminate-the-franchise- 14. William A. Testa and Richard H. tax/434996414. Mattoon, “Is There a Role for Gross Receipts 27. Ross Ramsey, “Today’s hated Taxation?” National Tax Journal Vol. LX, no. business tax is tomorrow’s property tax 4 (December 2007): 821-840. relief,” The Texas Tribune, April 26, 2017, 15. Andrew Chamberlain and Patrick https://www.texastribune.org/2017/04/26/ Fleenor, “Tax Pyramiding: The Economic analysis-todays-hated-business-tax- Consequences of Gross Receipt Taxes.” Tax tomorrows-property-tax-relief/. Foundation Special Report No. 147 (December 28. Graphic Packaging Corp. v. Hegar, 2006); Washington State Tax Structure Tex., No. 15-0669. Oral arguments were Committee, “Tax Alternatives for Washington held on Sept. 13, 2017. See http://data. State: A Report to the Legislature,” Volumes scotxblog.com/scotx/no/15-0669. 1&2, (November 2002). 29. Texas is a member of the 16. Pogue (2007) indicated: “The tax Multistate Tax Commission and its rate differentials lead to inefficiency by Multistate Tax Compact. The purpose of creating artificial differences in the costs. If the compact is to promote uniformity in

7 RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 01.09.18

state taxes. At the same time, the compact is also a binding interstate contract in AUTHOR which Texas is bound by the Compact Joyce Beebe, Ph.D., is a fellow in public Election and the Compact Formula. finance at the Baker Institute Center for 30. The businesses that challenged Public Finance. Her research focuses on tax the Michigan amendment include: IBM reforms in the U.S. and computable general Corp., Gillette Commercial Operations North equilibrium modeling of the effects of tax America, Goodyear Tire & Rubber Co., reforms. Her other research interests include DirecTV Group Holdings, Sonoco Products wealth accumulation over a person’s lifetime Co., and R.J. Reynolds Co. The U.S. Supreme and, generally, how public policies influence Court did not accept any petition to review decision-making. these cases. 31. Autohaus LP v. Hegar, Tex., No. 17-0253. Petition for review was filed on May 24, 2017. The court requested response was filed on Sep 6, 2017. The petition remains pending. See http://data.scotxblog. com/scotx/no/17-0253. 32. Am. Multi-Cinema, Inc. v. Hegar, Tex. App., 3rd Dist., No. 03-14-00397-CV. 33. Hegar, Tex. v. Am. Multi-Cinema, Inc., No. 17-0464. See http://data.scotxblog. com/scotx/no/17-0464. 34. Citizens Research Council of Michigan, “Outline of the Michigan Tax System” (2016 Edition).

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Cite as: Beebe, Joyce. 2018. A Primer on Gross Receipts Taxes. Issue brief no. 01.09.18. Rice University’s Baker Institute for Public Policy, Houston, Texas.