Repeal the Property Tax?

By Bob Hebert –

It’s election time, and once again calls are being made to repeal the property tax. I certainly favor repealing the property tax due to its regressive nature. A property tax is levied against what you own, not what you earn. That can create extreme hardship for homeowners finding themselves between jobs or underemployed, as well as disabled or senior citizens living on fixed incomes. All of those groups struggle to hold onto their homes in the face of ever rising property tax bills. For most of the rest of us, property taxes are a recurring irritation that we would prefer to do without.

Repeal of property taxes would solve those problems, right? Well, maybe. Property taxes support a myriad of local services in Texas: education, roads and bridges, police and fire, water and wastewater, indigent and mental health services to name only a few. Property taxation can’t be repealed unless a new or expanded system of taxation is implemented in its place, and that new tax system must generate billions of dollars per year to fund the statewide local government services currently funded by a property tax.

The 2019 legislature did fund a greater portion of education costs, and they did reduce the cap on city and county tax increases to 3.5%. However, city and county taxes were not reduced; only their rate of increase was reduced, and the reduction in education property taxes is a temporary reality at best. The property tax remains as regressive as ever. Our last legislature bought some time to address the issue of repeal, but that time will pass quickly.

One solution adopted by other states is an income tax, but a significant majority of Texans are on record opposing an income tax. You only need to observe the federal income tax from its inception through today to see that even the most limited income tax levy will morph into an unreasonable burden as successive legislative sessions manipulate it to solve short-term political problems without regard to long-term impacts. However, without an income tax, we must be extremely creative with any property tax replacement system in order to raise the required revenue without ruining our economy or creating unnecessary financial burdens for any segment of our population. That’s going to be difficult to do, but I believe it can be done.

The candidate mail I receive today confirms various candidates’ willingness to repeal the property tax, but most don’t address the replacement tax program, and those few who do merely offer that they will support a plan approved by the legislature, subject to approval by the voters. Therein, in my opinion, lies a danger. If we send folks to Austin with a mandate to repeal the property tax without them understanding the issue well enough to intelligently discuss options with the voters, then a vacuum will exist in the legislature – a vacuum that special interests will be only too happy to fill.

Therefore, I suggest that you to bring the question forward as you attend debates, coffees, meet-the-candidate events of all types, by asking candidates, “What would you propose as an alternate tax system to allow us to safely repeal the property tax?” Hear them out and determine if they understand the various options well enough to represent you in the state legislature.

Will the property tax be repealed in 2021? I doubt it, because the legislature will probably take some time to evaluate the true impact of its 2019 reforms. However, bills will almost certainly be introduced to repeal the property tax in 2021, and any bill introduced has the potential to become law. Therefore, it’s not too early to ask candidates to go on record as to their position on the repeal and the replacement side of the property tax repeal question – the legislative answer to which may boost or break the Texas economy.

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