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After historic tax cuts, Texas lawmakers evaluate eliminating property taxes entirely
Posted on 9/5/24 at 12:41 pm
Posted on 9/5/24 at 12:41 pm
quote:
Last year, after months of negotiating, the Texas legislature approved an $18 billion package of property tax cuts. Now, the Texas Senate evaluated going even further, potentially eliminating property taxes entirely.
On Wednesday, the Texas Senate Committee on Finance took testimony on what further property tax cuts would look like, particularly by cutting school district property taxes, or property taxes entirely. Some Senators on both sides of the aisle appeared skeptical of such holistic tax eliminations, but inclined to further cuts.
The Legislative Budget Board, a state agency tasked with evaluating the fiscal impacts of state legislation, testified that school district property taxes contributed some $81.5 billion to the state's funding. Eliminating the school district property tax would, effectively, carve that from state funding.
"So, how would we pay for that?" Sen. Chuy Hinojosa, D-McAllen, said, in the committee hearing, to a few moments of silence. Sen. Joan Huffman, R-Houston, who chairs the committee, then called that the "eighty-billion-dollar question."
With already no state income tax, if Texas were to eliminate property taxes entirely, that would mean the state would receive the bulk of its funding from the sales tax. Currently, at 6.25%, the Comptroller's Office testified that the sales tax would have to increase to somewhere around 22% to make up for losses, should property taxes be entirely eliminated.
"Diversity in revenue is a policy that I think we need to acknowledge as we have these conversations," Sen. Charles Perry, R-Lubbock, said on Wednesday.
Republican leaders, including Governor Greg Abbott, have called publicly to work toward eliminating the school district maintenance and operation, or M&O, property tax. As part of the interim charges for the Texas Senate Finance Committee, Lieutenant Governor Dan Patrick tasked the panel to determine what level of compression and increase of the homestead exemption could benefit Texans further.
Last session, property tax cuts proved to be one of the most politically divisive issues among the legislature, sowing discord between the two chambers and their leaders, Patrick and House Speaker Dade Phelan. After the regular session and two special sessions, the two chambers approved the $18 billion package, which voters approved in November.
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Posted on 9/5/24 at 12:43 pm to ragincajun03
I'd rather just have a sales tax and eliminate everything else. Everyone would have to pay it so people would be hesitant to vote for increases because they'd see it on every purchase.
Posted on 9/5/24 at 12:43 pm to ragincajun03
I doubt it happens. I can’t imagine businesses would like a 22% sales tax.
I’d be driving to Oklahoma for shopping.
I’d be driving to Oklahoma for shopping.
Posted on 9/5/24 at 12:45 pm to ragincajun03
I'd love it but no way it happens. I'd take a solid reduction. Stroking those checks every year is painful.
Posted on 9/5/24 at 12:46 pm to GeauxTigers123
quote:
I doubt it happens. I can’t imagine businesses would like a 22% sales tax. I’d be driving to Oklahoma for shopping.
I think I’d love it but I’d have to do some math.
Posted on 9/5/24 at 12:47 pm to billjamin
quote:
I'd love it but no way it happens. I'd take a solid reduction. Stroking those checks every year is painful.
Going to look at a place today and it’s 2.93%
Really want to be in the 1.57% area but the houses are high as giraffe pussy.
This post was edited on 9/5/24 at 12:49 pm
Posted on 9/5/24 at 12:48 pm to GeauxTigers123
Everybody would live close to the state borders. Go shop in Oklahoma, Arkansas, louisiana, New Mexico.
Posted on 9/5/24 at 12:49 pm to GeauxTigers123
quote:
doubt it happens. I can’t imagine businesses would like a 22% sales tax.
My initial thought is paying 22% for all my purchases would actually increase my tax liability for the year compared to the property taxes I pay
Posted on 9/5/24 at 12:50 pm to GeauxTigers123
quote:
I can’t imagine businesses would like a 22% sales tax.
Business inputs would probably be tax free, silly.
quote:
I’d be driving to Oklahoma for shopping.
Use taxes are a thing.
Posted on 9/5/24 at 12:50 pm to fallguy_1978
quote:
Everyone would have to pay it so people would be hesitant to vote for increases because they'd see it on every purchase.
yup, it's time for poor people to start paying their fair share.
Posted on 9/5/24 at 12:51 pm to billjamin
While I hate income taxes the most, because you’re punishing me for going out and making more money, I could be talked into bringing some sort of SMALL intro of income tax in exchange for eliminating property taxes.
However:
1- I would want the income tax, or at least a good part of it, to be a local one, though State Constitutionally locked in. The reason I prefer property taxes to state income taxes is because it helps decentralize government revenue and control over local communities.
2- It can’t be something like Louisiana’s state income tax structure. My property taxes aren’t fun to pay, but no way in hell would I want that swap, even if it completely eliminated my property taxes.
However:
1- I would want the income tax, or at least a good part of it, to be a local one, though State Constitutionally locked in. The reason I prefer property taxes to state income taxes is because it helps decentralize government revenue and control over local communities.
2- It can’t be something like Louisiana’s state income tax structure. My property taxes aren’t fun to pay, but no way in hell would I want that swap, even if it completely eliminated my property taxes.
Posted on 9/5/24 at 12:52 pm to ragincajun03
quote:
the Comptroller's Office testified that the sales tax would have to increase to somewhere around 22% to make up for losses
Posted on 9/5/24 at 12:52 pm to MintBerry Crunch
quote:
Use taxes are a thing.
That no one pays
Posted on 9/5/24 at 12:53 pm to ragincajun03
I would be totally fine with the current property tax rates if they eliminated the recapture bullshite.
In FY2023, Austin ISD paid $578.3 million more in Recapture Payments than the second highest Texas School District. Austin ISD continues to be the largest payer into the state finance system under current law.
Why the hell am I paying such high property taxes if they are LEAVING the school district I am paying them into?
In FY2023, Austin ISD paid $578.3 million more in Recapture Payments than the second highest Texas School District. Austin ISD continues to be the largest payer into the state finance system under current law.
Why the hell am I paying such high property taxes if they are LEAVING the school district I am paying them into?
Posted on 9/5/24 at 12:55 pm to ragincajun03
They just need to lower the property tax rate some and quit letting these appraisal districts raise your home value every year. I’m ok with a one time increase at purchase to the sales price but this automatic 10% they get away with every year offsets whatever exemptions they try to come up with.
Posted on 9/5/24 at 12:58 pm to fallguy_1978
quote:
I'd rather just have a sales tax and eliminate everything else.
Agree, however, the people that live near state lines would just drive over to make larger buys. Not sure how to get around that.
Posted on 9/5/24 at 1:04 pm to MintBerry Crunch
quote:
Business inputs would probably be tax free, silly.
Business owners would be opposed to the idea.
Stores anywhere near the borders would lose tons of sales to neighboring states.
Posted on 9/5/24 at 1:07 pm to ragincajun03
While I would love a system like that, I just don’t see how it passes in today’s world of entitlements. You’d have mass riots from the poorer areas which are primarily renters who don’t pay property tax and all of a sudden see every purchase they make increase 10-12%. Any headwinds conservatives have made to minority populations would be wiped out overnight.
Posted on 9/5/24 at 1:09 pm to Rize
quote:
I think I’d love it but I’d have to do some math.
My current Texas property tax is over $10,000/yr, so I would like to do some math as well. Collin County is being infested with apartments and townhomes, so I could see a deduction in property tax and increase in sales tax could actually bring in more revenue and spread the tax burden to all the renters. On the other side TX sales tax already ranks 13th in US and a full point increase would tie it with CA for highest. Not much room to work with.
It is nice to have no state income tax, but that could be something to address. The education system currently is the burden of the home owners, and that should be shared based off current housing coming in.
Posted on 9/5/24 at 1:12 pm to ragincajun03
quote:
Currently, at 6.25%, the Comptroller's Office testified that the sales tax would have to increase to somewhere around 22% to make up for losses, should property taxes be entirely eliminated.
Dangerously close to the type of tax policies that have been tried and failed in places like New York.
It creates all sorts of bad incentives when you get that high. Think about the extra costs for services and new cars for example. You'd be crazy not to seek out strategies to avoid the extra costs.
You also create an instant black market for all sorts of goods. Some people still remember the Eric Garner case of the large man who died after being restrained by New York police, but a minority of the people who remember him also remember the reason he was there illegally.
The reason was to sell untaxed cigarettes because New York sin taxes are high enough for there to be a rational market need. These kinds of taxation choices create the incentive for avoidance and are inevitably inconsistent and therefore more unfair.
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