Voters don’t like property taxes. State lawmakers like voters and want them to be happy. But they are not going to lower your property taxes.
As they enter the second half of their 30-day special session, Texas legislators are trying to limit increases in a tax they do not control. They might accomplish that much, but they don’t have the power to actually cut your property taxes. Only the local governments that set your property tax rates can do that.
This is a weird public policy problem, and a prickly political one. People complain because taxes are high. They complain at town hall meetings and in letters and calls to state officials, in volumes high enough to prompt official action, even from officials who aren’t directly responsible for the taxes they’re complaining about.
State lawmakers, eager to win over their angry taxpayers, can intervene in a couple of ways: by increasing what it spends on public education and thus lowering pressure on local school taxes or by trying to hobble cities and counties and other tax collectors with growth limits and reporting requirements and so on.
The second option is less satisfying to voters, but it’s cheaper.
Over the past decade, the state’s share of the cost of public education has dropped from about 45%, according to the Legislative Budget Board, to about 38%. Had legislators and budget writers kept the state’s contribution at 45%, local school districts across Texas — and their property taxpayers — would have spent $18.6 billion less over that decade than they actually did.
If state lawmakers had that much money in the till, they’d be able to say “our bad” and put a bandage on the boo-boo, spending more money per student and giving local property taxpayers a big, fat tax cut.
They don’t have the money. The governor has asked them to study the school finance system, an exercise that could address property tax pressures, equity among school districts, adequacy of public education, and a number of other gnarly policy issues connected to public education and how we pay for it.
In the meantime, legislators are considering that second, cheaper option mentioned above — restraining local government increases in property tax increases.
They failed in the regular session. The Senate wanted to require voter approval for any local tax increases (not including school districts) over a certain amount. The trigger rate was different in various proposals; special-session legislation approved by the Senate last week would require elections for tax hikes of 4% or more; a House committee change would put the trigger at 6%. (They’ve tried very hard to spin that as savings, even going to the extent of attaching an unusual “hypothetical fiscal impact” to the financial analysis of Senate Bill 1.)
A separate House bill scheduled for debate today has a lot in common with a proposal that stalled in the regular session. It doesn’t mess with the rollback rates. Some people aren’t even calling it a property tax bill, opting for “the transparency bill.” The idea is to change property tax notices to make it clear to each taxpayer what each local government is proposing to do with tax rates — the better to arm people to complain to city hall or the commissioner’s court when they think tax hikes are too high.
None of those bills would lower taxes. Each theoretically arms voters to keep local taxing and spending under tighter control. And neither of them gets to the more effective, more expensive rebalancing of the school finance system.State officials, to take their side for a minute, have no easy way out of this box. The state already has the sixth-highest property tax burden in the country, according to the Tax Foundation. Texas has the 12th-highest sales tax. Other states can keep those taxes down, in part, because they also have personal income taxes.
Texas doesn’t have one, and is pretty proud of it. One of the most emphatic answers — ever — to a question in a University of Texas/Texas Tribune Poll was on a state personal income tax. In 2011, when the state was in a very tight financial spot, the poll aimed to see what sources of revenue might be more or less acceptable to voters. Personal income taxes were deemed the unfairest proposal of all; only 6% said they’d be willing to consider it.
Raising the state’s sales tax was right behind income taxes in unpopularity in that six-year-old survey; only 12% thought that was a good idea.
Two years ago, Texas lawmakers began dismantling the business franchise tax that was the foundation of the state’s last rebalancing of public school finance a decade ago.
The money has to come from somewhere.
Texas does have more $$ to put toward schools (Economic Stabilization Fund – ESF), which is estimated to be at $10 Billion. They could use part of it on education funding, but choose not to.
Income tax is a more progressive tax – it can be based off of income earned (those who make more pay more) and not some arbitrary number like property taxes. It is a more equitable way to tax constituents. Property and sales taxes unfairly tax low and middle income residents. If Texas truly wants to be progressive and have enough money for public goods like roads, transit, police, fire and schools then they seriously need to consider an income tax to halt the steadily rising property tax. Lower income earners could use deductions for property taxes and sales tax on their income tax filings.
I’ve lived in no income tax and income tax states as a homeowner and states with income tax have a much easier time funding public goods and improving income earned for low/middle class populations.
Maybe cities, individually, could implement an income tax to keep their property and sales taxes lower? Or does Abbott want to control that, too?
Thats always the solution right? Just pile on more taxes? Maybe if the coty wasnt paying for gay pride crosswalks, the7 qould be able to meet these mysterious budget pitfalls that they so often jump into at every turn. Another thing is to cut things like PreK for SA which is only offered to certain individuals and not everyone.
I agree with Dawn above that a “progressive income tax” is more fair. It’s more fair than any other tax because it does not put an increased burden on individuals with low income than it does on people with high income. Her definition of it was too short many people tend to misunderstand because of such short definitions, especially if they WANT to misunderstand.
With a progressive income tax EVERYONE pays the same amount on the same earnings. Even the top 1%, for instance pay the same amount of tax on their first $10,000 of income as someone making $10,000. That person making only $10,000 would pay no more income tax (except in future years when their income increases). Then the top 1% would pay the same amount of tax on their income between $10,000 and $20,000 that everyone else would pay for their income within that range. The progressive tax taxes EVERYONE the same percentage rate within each established brackets and EVERYONE pays the higher percentage as their income increases and enters higher brackets. The higher one’s income becomes, earners pay more, but their take-home pay also increases. This gives everyone has the incentive to work toward a higher income, even though they will have to pay a higher tax rate on their INCREASED income as they pass the one range of income tax bracket into the next. The higher tax rates for higher income tax brackets, therefore, treat everyone the same.
It is human nature for people to feel like they are being cheated with a progressive income tax, because they only look at their tax rate for their highest bracket. They like to say and think, “I’m paying 35% in income tax!,” when they aren’t. They are only paying 35% on the income they are making within the 35% bracket. On their first few thousands of dollars, they are paying no taxes, because the lowest bracket has NO percentage for ANYONE–government’s way of trying to make it easier for EVERYONE to afford a very basic living without taking money from them. Then the higher income people are paying the same percentages within each bracket as everyone else is paying within them.
Of course, it should be pointed out that the most fair progressive tax is one that has NO DEDUCTIONS except for the number of people within the family that that income is supporting. Otherwise, deductions are a form of the government giving away money for free in a way that some get advantages and others don’t–unlike having the same tax brackets with the same rates for everyone. That’s why the homeowner’s deduction is unfair; it is skewed to favor people with more expensive homes–giving back more money to them just because they can afford to buy more expensive homes.