Property Taxes – Be Careful What You Ask For
Updated on Wednesday, Jul 26, 2023
Most Texans are probably aware that the recent stalemate on property taxes between the Governor, the Texas House and the Texas Senate have been resolved. There were two approaches to reduce property taxes in Texas put forward that were finally merged. One was the Senate plan, which is increasing the homestead exemption. The other was the House plan, which is supported by Governor Abbott, which essentially compresses the property tax rate by reducing the rate of school property taxes that is paid for by local property taxes and increasing the amount that is paid by the state.
The bottom line is that homeowners will see a reduction of their property taxes with both approaches, one of the highest in the nation. Or will they? In the short term that is true, but there is more to the compression option than is being told by most political leaders. Businesses and renters are affected differently in the two approaches as just one consideration.
For instance, with a homestead exemption, only homeowners benefit. Businesses and renters pick up the additional "ad valorem" (property) tax adjustments, whichever direction the rates combined with the property valuation indicate from year to year. Compression benefits homeowners, businesses and renters alike by reducing the bottom line property taxes due on a given property, regardless of whether it has a homestead exemption or not.
That's the information you've probably heard and understand. But there's more to this with further digging...
Ask yourself, if the state is paying a greater share of the school’s costs as it is with rate compression, does that not put more power into the state to dictate what happens in our local schools and remove it from local elected officials? Which is easier, to talk to a local elected official, or a state official or bureaucracy? Will school boards have the power to decide policy matters if the state is paying the majority of the school’s costs and debt obligations? What strings will come with that financial “benevolence”? How will that effect the balance of power that is necessary in a free society between lower and higher government entities?
Another thought – if the state assumes a greater share of the school costs, where will that additional money come from? What happens when the budget comes in as needing to raise additional revenue to the billions it takes to run Texas schools in future years? Here’s one thought that should concern us all – it may be very attractive for Legislators to authorize a state income tax like most of the other states currently do. So renters and owners (but not businesses!) alike would be liable for those taxes once again, but in a different form – one in which there is very little ability to protest or effect change from a local perspective.
Much more discussion is needed to inform people about the ramifications of both plans. Asking to get rid of property taxes may sound like a good idea, especially if the megaphone that is broadcasting that message is relentless. Most people are familiar with the proposition that you can’t really own property if you owe property taxes on that property. But that propaganda relies on the ignorance of people in regards to Texas’ homestead exemption and the laws surrounding it that prevent government from the taking of property for taxes while the owners are living. I’m sure that most people that want to have the illusion of "owning" property by virtue of no property taxes have not considered the effects of an increase in the state sales tax rate, or the creation of a state income tax to aid the state in amassing financial and policy control over local school districts. These effects in my opinion can easily outweigh the misguided illusions that come from folks that don't want to pay property taxes for the services provided by their local and state governments. Underneath that sentiment is the old adage of wanting something for nothing, which will always be a flawed philosophy of life, destined to ruin the individual who embraces it without question. Wanting something for nothing goes against the idea of what it means to live in a civil society where the worker is due their hire, and what it means to live in peace with one's neighbors and the society that surrounds them.
Be wise as serpents, and innocent as doves, especially in these days where information is plentiful as propaganda, but often lacking in its depth and comprehensive qualities.