The Texas-German Autohaus business has experienced a downturn for the past three years along with the fall of oil prices, but their taxes are at an all time high. It isn’t because of their income. It is because of the Texas property tax on their location– Edloe street –which is more valuable than ever.
As mentioned by Hans Richter:
“Property taxes are out of control when taxes grow faster than the economy; that’s not sustainable.”
Lawmakers have placed limits on the increase of property taxes for homeowners over age 65, but not for businesses. As a result, the tax burden has shifted onto businesses, which have seen tax bills at the highest they have ever been. Property taxes paved the way for small businesses to end up closing, not because they don’t make money, but because taxes are climbing up too fast. The Texas property tax increases are much worse than in many other states. The only effective way to control the amount of property taxes that people pay is to control the total levy.
Currently the limit for property tax is 8 percent, and several Republican-sponsored bills propose lowering it to between 4 percent and 6 percent. Allowing property taxes to keep growing is unacceptable. This legislation proposes limits on property tax growth imposed by cities, counties and special purpose districts, which accounts for 45 percent of the bill. Lawmakers expect to collect more tax revenue from school districts. Nothing has been proposed to limit school district property taxes, which accounts for the other 55 percent of the tax bill.
What Texans really need is a property tax cut. Dale Craymer, president of the Texas Taxpayers and Research Association, said “The only reasonable way the state has of cutting property taxes is by tackling school finance and to substitute state dollars for local dollars.”
State Rep. the Andrew Murr, R-Kerrville, proposal of HB 285 would eliminate the property tax levied by schools for maintenance and operations and pay for schools using the state sales tax, which is currently 6.25 percent. This proposal would cut property taxes by half but raise the state sales tax to 12 percent. So Texans would have to pay a 14 percent sales tax, since local authorities add on another 2 percent. Currently, the state with the highest sales tax rate is California at 7.25 percent.
It may be wiser to have three taxes because they would balance the tax burden between those who make a lot, those who own a lot and those who spend a lot. The tax burden falls on people who make capital investments and on the average Texan who spends a larger portion of his income in stores.
Most Texans believe that Texas is a low-tax state despite paying crazy-high property taxes.
How much longer will Texans put up with the current property tax system? How would Texans feel about paying a higher sales tax in exchange for a property tax cut?
What if we were to introduce a smart income tax that would not raise property taxes, but better balance the tax burden and spur economic development? What are your thoughts?