It can be truly said that “no one in Texas owns their own property; they only rent it from the government.” In hard times, your home and land can be seized by a government taxing authority if you cannot pay the taxes. As with all government tax collectors, they are unforgiving and backed by force. Texas’ property tax burden—ranked 14th highest nationally by the Tax Foundation—continues to weigh heavily on homeowners and businesses around the state; but new research suggests that relief may only be a few modest reforms away. We must find new solutions!
According to the Texas Public Policy Foundation’s study, Enhancing Texas’ Economic Growth through Tax Reform, Texas can eliminate its property tax burden entirely by replacing the revenue with a reformed sales tax. The Foundation’s study identifies four scenarios in which the sales tax base and rate could be reasonably adjusted to produce a revenue neutral swap:
- 14.5 percent, if the current sales tax base is used;
- 12.5 percent, if the current sales tax based is used and the sale of property is included;
- 9 percent, if all services that are taxed in at least one other state are taxed in Texas and property sales are included;
- 6.5 percent, if the sales tax base is the total value of goods and services in Texas’ economy, with adjustments made to remove non-taxable items such as government purchases and the sale of property.
Repealing property taxes and replacing the revenues with one of the proposed sales tax reforms would go far toward providing meaningful tax relief for property owners. It would also have the added benefit of strengthening the state’s economy. I am predisposed to any solutions that repeal property taxes. Just because someone doesn’t own property doesn’t mean they are not paying for property taxes. Every business and rental includes property taxes in their overall cost as a hidden tax on customers. This is also true of the Texas Business Franchise Tax (also known as the business margins tax), another example of a pie-in-the-sky tax that did not generate the revenues that were promised. Do not think for one minute that these tax burdens are not passed on to the consumer.
If the property tax swap were to become a reality, personal income in Texas could potentially increase in the range of $3.1 billion to $3.3 billion in the first year. Over a five-year period, assuming property taxes were replaced dollar-for-dollar with a higher sales tax burden, personal income could, on a cumulative basis, increase between $21.3 billion and $52.1 billion—2 percent to 4.3 percent higher than would have been the case otherwise. The strong economic growth that tax reform would produce would spur an estimated five-year net gain of 127,700 to 312,700 new jobs.
I believe that taxes should be transparent and open to public scrutiny. The more the State and local governments can split and spread revenue generation streams the better they are able to hide the true costs of government from the people. If Texas were to consolidate its revenue streams (taxes) into a simple, broad-based tax where all Texans have some “skin-in-the-game” with respect to State spending, then I daresay governments would be more likely to rein in out of control and unnecessary spending or at least have to justify the spending they do.
Now, in the upcoming 83rd Legislature is the right time to address tax reform. Rumor is that the legislative leaders are already conspiring to offer up a State Income Tax to meet the expected 21 Billion budget shortfall or accept revenues from state-sponsored gambling. Remember when the State lottery would reduce property taxes and provide a dedicated revenue stream for education spending? Somehow I think we are being played yet again. They say that we can’t cut our spending enough or that Texans will never accept much higher property taxes or a new State Income Tax, but they won’t even entertain the idea of overhauling and reforming the State sales tax code. A new income tax kills our economy and higher property taxes means more Texans will lose their homes and businesses. As your Representative, I will do all in my power to expose any corrupt backroom dealings with respect to Texas taxes.
Perhaps the greatest incentive for property tax reform has nothing to do with tax relief, creating wealth, or adding new jobs. It has to do with your “natural rights” as described in the US Constitution. The phrase “…life, liberty, and the pursuit of happiness” did not mean you have the right to live free with a silly grin on your face. The “pursuit of happiness” directly equates to property and your right to keep what you earn and own. I want Texas to be a “freehold” State, where you can truly own your property without the threat of force (confiscation) and tribute to the government. Sometimes, our property is all we have left. If elected, there will not be a fiercer defender of property rights and advocate for the elimination of property taxes.
