A Brief History of Texas Property Tax Relief Initiatives

Size: px

Start display at page:

Download "A Brief History of Texas Property Tax Relief Initiatives"

Joel Henderson
8 years ago
Views:

1 A Brief History of Texas Property Tax Dale Craymer TTARA Research Foundation

3 Select Committee on Tax Equity

4 Select Committee on Tax Equity

5 Select Committee on Tax Equity Texas local governments are much more constrained than state government in the kinds of tax sources available to them, and poor economic conditions and growing responsibilities the capacity of the local fiscal system is being sorely tested.

6 Select Committee on Tax Equity

8 Governor s Task Force on Revenue

9 Governor s Revenue Task Force Any future change in the Texas tax structure should begin with and proceed from the premise that local property tax payers need immediate relief, especially from the growing reliance on [the] heavy burden of property taxes to support public education.

10 Governor s Revenue Task Force Tax Changes Personal income tax of 5%, 75% of proceeds dedicated to property tax relief Replace franchise tax with 7.5% corporate income tax Increase fuels tax by 5 cents per gallon Increase motor vehicle sales tax by ¼% Tax Relief 40 percent reduction in school taxes Note: proposal was not revenue neutral, it would also have retired the existing state deficit and increased funds for roads and higher education

11 Governor s Task Force on Revenue

13 Bush Tax Relief Initiative

14 The Citizens Committee Governor orders study of 3 options to replace school property tax: Sales Tax Gross Receipts Tax Business Activity Tax (ala. Michigan SBT)

15 Citizens Committee on Property Tax Relief Texas current high level of school property taxes hampers capital investment and hampers the ability of Texans to buy and keep their own homes. Further, as a revenue tool, property taxes may not be well suited for providing longterm adequate revenues for our public schools. Finally, the Committee finds that substantial public sentiment exists for property tax relief.

16 Bush Proposal Tax Changes Replace Franchise Tax with 1.25 % Business Activity Tax Increase Sales Tax ½ percentage point Use $1 billion state surplus funds for net tax relief Tax Relief Increase school homestead exemption to $25,000 Exempt business inventories from the school tax Cut school tax rates by 20 cents

17 Results of Bush Proposal Bickering Backbiting Teeth-gnashing Hand wringing Name calling Increase in school homestead exemption by $10,000, financed by state surplus Teacher pay raise Separate bill provided Constitutional amendment capping homestead appraisals growth at 10%

18 Bush Tax Relief Initiative

20 Bivins/Bush Tax Relief, Round 2

21 Bivins/Bush Tax Relief Package $900 million of state funds used to compress school tax rates by 5 to 6 cents

22 Bivins/Bush Tax Relief, Round 2

24 Texas Tax Reform Com.

25 Texas Tax Reform Commission Tax Changes Replace Franchise Tax with new Margin Tax calculation Increase cigarette tax by $1.00 per pack Use surplus state funds of roughly $2.5 billion annually Tax Relief School maintenance and operations taxes reduced by one-third over a two-year phase Limited local option taxes allowed for enrichment without voter approval

26 Texas Tax Reform Com.

27 Texas Tax Reform Com.

30 Lessons Learned It takes a tremendous amount of money to provide noticeable property tax relief Measures that target relief to one group of taxpayers--such as homestead exemptions or appraisal caps--by themselves do not lower the overall tax burden

Property Tax Relief: The $7 Billion Reality

August 2008 Property Tax Relief: The $7 Billion Reality In the spring of 2006, Texas lawmakers passed a massive package of school finance reforms. School tax rates for maintenance and operations were to