Texas-sized property appraisals fuel tax-swap
talk
By Kenric Ward / May 12, 2016
Another year of soaring property appraisals is spurring talk of
scrapping Texas’ property tax in favor of an expanded sales tax.
“The most appealing part of the plan is the ability to own your
own property as opposed to ‘renting’ from the government,” says James Quintero,
director of the Center for Local Governance at the Texas Public Policy
Foundation.
Texas’ property taxes — the sixth highest in the
nation — are anything but transparent. More than 4,000 localities and
special taxing districts levy property taxes, obscuring exactly who is
responsible for raising them, how that money is spent, and whether any
increases are necessary.
“The tax system is absolutely broken,” Bexar County deputy
appraiser Mary Kieke told the San Antonio Express-News . She says a lack of disclosure requirements makes it nearly
impossible to systemically determine the fair market value of properties.
The result is highly subjective and hotly contested appraisals.
More taxpayers are challenging their assigned property values; some 90,000
protests were filed in Bexar County alone last year.
“Currently, a disproportionate share of taxes are paid by a few,”
notes Allen Tharp, president of the San Antonio Tea Party . Schools account for half of most tax bills, whether the assessed
homeowner has children or not.
Politicians deflect an outright revolt by boasting that they are
holding steady, or even reducing, tax rates. When aggressive county appraisers
boost values by double-digit percentages, local governments reap record revenue
increases without raising rates.
While mainstream media outlets trumpet the “reductions,” Texas
property tax collections have roughly doubled since 2003 — from $29
billion to more than $50 billion today.
In addition to property taxes, Texans are saddled with a sales
tax of about 8.25 percent (rates vary by county).
TPPF’s Quintero estimates that a statewide 10.98 percent sale
tax would cover all government and school operations currently funded through
property taxes.
“This would invite significant job growth and opportunity,” he
told Watchdog.org. “The property tax right now acts as a deterrent to
investment, particularly with regard to capital-intensive industries.”
A report, “The Freedom to Own
Property,” estimates that a reformed sales tax would:
·
Add 124,900 to 337,400
net new jobs over a five-year period, beyond the job growth Texas would have
without the tax reform.
·
Boost personal income
in the range of $3.6 billion to $3.68 billion in the first year. Over five
years, personal income could increase between $22.85 billion and $63 billion,
or 1.8 percent to 4.7 percent higher than it would have been otherwise.
Mark Pulliam, a retired attorney and Travis County activist,
said he has reservations about switching to an expanded sales tax. “In addition
to being politically difficult, we could end up with both taxes,” Pulliam
predicted.
He prefers statutory curbs on government spending, as well as
limits on property taxes.
Republican state Sen. Paul Bettencourt, who is chairing a series
of hearings on property tax
reform , last year introducedSenate Bill 182 to cut the property tax “rollback” rate to 4 percent. Heavy
lobbying from the Texas Municipal League, the Texas Association of Counties and
local school districts helped kill the measure.
“Mayors and county judges effectively admitted that their local
governments are so badly mismanaged that they can’t make ends meet on increased
revenue of 4 percent per year without cutting public safety, parks and
libraries,” said Jerome Greener, president of the Texas chapter of the
free-market Americans for Prosperity.
Dean Wright, co-founder of the Austin Tea Party, calls limits on
property tax increases “a good first step.” But he said the ultimate goal is to
eliminate the property tax and replace it with the TPPF-endorsed sales tax that
would include a sales tax on home purchases and levies on services that are taxed
in other states.
“Zero-based budgeting also needs to happen,” he added.
Meantime, Bettencourt notes that while property tax levies have
grown 41 percent in the past decade , Texans’ median incomes rose
just 6.2 percent.
“We can’t afford this over the long term,” the Houston
Republican said.
Kenric Ward writes for the Texas Bureau of Watchdog.org. Contact
him atkward@watchdog.org . @Kenricward.
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