Finally Ending Property Taxes?

Texas doesn’t have ‘a’ property tax, as any property owner knows, we have hundreds — nay, thousands. Schools, cities, counties, hospitals… they and more have claims on your property. Now one state legislator says he wants to abolish them, or at least start moving that way.

Such a dialogue is good news — or could be — for Texas’ property owners and taxpayers. Property tax burdens in Texas are among the highest in the nation, and are a big disincentive for heavy manufacturing and other property-intensive enterprises. It’s been said many times before, but as long as property taxes remain so high Texans end up only renting their property from government.

State Rep Harvey Hilderbran (R-Kerrville) has told San Antonio radio station WOAI that he plans to file legislation in the next “session to begin the process of abolishing residential and commercial property taxes.”

Hilderbran currently chairs the House Ways and Means Committee, which oversees tax policy in the Lone Star State.

With property taxes funding the lion share of public education and many local-government entities, the devil rests in the details of how those revenues will be replaced. And make no mistake, many in Austin will be arguing for new revenue sources.

Moving Texas away from such heavy reliance on property taxes has been a key plank for conservative activists for more than a decade. The Texas Conservative Coalition Research Institute and Texas Public Policy Foundation have both written extensively on the issue, providing the intellectual background for discussions in the Capitol and around the state.

Since 2008, our questionnaire for candidates has asked if they support — in principle, at least — moving away from property taxes, in favor of making greater use of the existing consumption (sales) tax. The response has been overwhelmingly positive, because it is the right economic place to stand.

The state’s 2012 Republican Party Platform puts it this way, saying the party encourages:

* Abolishing property taxes
* Shifting the tax burden to a consumption-based tax

Only grow-government shills and far-left liberals, beholden to outdated economic theories (or just clinging to ready-access to your wallet), oppose reforming the property tax revenue scheme.

Failed attempts are nothing new.

Moderate legislator Jim Keffer of Eastland — who previously chaired the House Ways and Means Committee to ruinous effect — authored a wage-tax under the false promise that it would bring down property taxes. That measure — a kissing-cousin to the income tax — died an appropriately ignoble death. The grow-government Keffer then authored the legislation creating the state’s hideously inefficient and overly burdensome “gross margins tax” to do the job.

Even as the property tax rate went down, Keffer and his pals stopped reforms of the appraisal system — so most property owners never saw any relief from their tax burden. (Keffer is a close confidant of House Speaker Joe Straus, who has pronounced protecting Texans from higher property taxes as ‘bad policy.’)

Mr. Keffer’s foolish foray into tax policy is a lesson in just how wrong tax-swaps can go when not carefully managed by courageous conservatives. For example, an income tax (or a Keffer-style wage tax) would be an economic disaster for the state and must be opposed.

While some economists suggest the state’s sales tax rate could go higher or be expanded to currently un-taxed goods and services, we should be careful to preserve certain elements — like not applying the sales tax (or at least the full brunt) to groceries and prescription medications — that serve to keep Texas’ consumption tax fair and equitable.

We should also consider a proposal put forward several years ago strictly limiting the growth of government in Texas, and applying surplus dollars to buying down the school M&O property tax while also reforming the overall appraisal system.

Mr. Hilderbran deserves credit for wanting to start the conversation. But with anti-reform colleagues — like the aforementioned Joe Straus — all-but defending the burdensome status quo, the Kerrville legislator may find himself wondering what he started.

 

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ABOUT THE AUTHOR

Michael is president and CEO of Empower Texans, and its premier project, Texans for Fiscal Responsibility. A graduate of Texas A&M, former newspaper reporter, one-time Capital Hill staffer, think tank vice president and an Eagle Scout, Sullivan is married with three children. He divides his time between the Metroplex, the rest of Texas, and Austin.

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