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Why no One is to Blame for Rising Property Taxes

The three key players in the Texas property tax system include the appraisal districts, tax entities, and politicians in the legislature. Rising property taxes have been a source of frustration and discomfort to many Texas businesses and homeowners. However, each of the parties in the process assigns blame to others for rising property taxes.

Property taxes are basically calculated by multiplying the market value set by the appraisal district times the tax rate. The calculation is slightly more complicated because of exemptions, particularly for homeowners.

Texas legislators take the position that they had no control over the tax assessment set by the appraisal district or the tax rate set by the tax entities. While this is strictly correct, the Texas legislator in the Texas Comptroller had been responsible for encouraging Texas appraisal districts to increase property tax values over the last 20 years. In practice, members of the legislature blame the appraisal districts and the tax entities for the tax increases.

When property tax assessments increase more than the combination of population growth and inflation, it seems appropriate that tax entities would reduce the tax rate so that the growth in taxes does not exceed the combination of population growth and inflation. However, the reality is that tax entities leave the tax values flat during times when the level of assessments are growing rapidly. This is one of the key factors that leads to substantial growth in Texas property taxes. In practice, the tax entities have more control with regard to limiting the growth in property taxes that you have the Texas legislature or the tax appraisal districts.

Texas appraisal districts take the position that they are simply accurately valuing property and equitably spreading the tax roll. This is the role they had been assigned by the Texas Legislature. While the Texas Comptroller’s ratio study supports the position that they are consistently valuing both commercial and residential property, the reality is that commercial properties are assessed at about 60 to 70 percent of market value and single-family homes are assessed at approximately 100 perent of market value. This creates a substantial disparity between the level of taxation for commercial property owners and homeowners. In fact, it also leads to homeowners subsidizing taxation of commercial property owners.

In summary, the Texas legislature has given assigned responsibilities to both the tax entities and to the appraisal districts. However the tax entities typically elect the option which maximizes tax revenues and the appraisal district elects an option which minimizes their workload by reducing the intensity of protests by commercial property owners. In fairness to the appraisal districts, it is also easier to accurately assess homogeneous homes than it is to accurately assess commercial properties which have substantial differences from property to property.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

Blog Author

Patrick O’Connor, MAI, Owner and President
Patrick O’Connor has been active in reducing property taxes, providing expert witness testimony and appraising commercial real estate property since 1983. Pat is active in publishing analyses and data with respect to the real estate market, while being a highly regarded media spokesperson for the real estate community. He holds a MAI, the highest achievable designation from the Appraisal Institute, and is a licensed senior property tax consultant. Pat earned a Master of Business Administration from Harvard University. In 2001, he authored the first definitive consumer guide to Texas property taxes, Cut Your Texas Property Taxes.

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O’Connor is the largest property tax consulting firm in the U.S. Our licensed tax consultants and administrative support team benefits home and property owners by reducing property tax assessments, filing personal property renditions, reviewing tax statements, protesting over-assessed property values, and attending informal tax hearings and appraisal review board meetings.

 

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