Sara Leon & Associates, LLC

Joe’s Commentary: A Collection of Texas Property Tax Articles - May 5 & 6, 2014 (UPDATED)

posted on May 06 - 09:00 AM
By Josh -

It is election season and one of the major talking points is property tax reduction. Some candidates are promising to do away with school property tax altogether - AGAIN. In reality, if you look at total taxes, Texas is already a low tax state, while ranking at 41 among the states in spending on education.

Most states finance local and state government largely through some mixture of sales taxes, property taxes and income taxes. Texas is one of nine states that do not levy an individual income tax. Texas does not have a statewide property tax, but local property taxes remain a crucial complaint among businesses and homeowners.

I have seen tax reduction in action in Texas for the past several decades and believe that we do not get the full picture up front in these political debates. With every new exemption given (exemptions are numerous and growing), the burden is not lessened, people need to understand this is just moving that same burden from one group of taxpayers to another. This political solution is not fair to all taxpayers. While It sounds good to voters, in reality, plans like I am seeing applied to a poorly designed tax system result in a tax reduction for one person and a tax increase for everyone else. It is often those with the gold that make the rules and get the tax reductions; the rest pay. I want you to look at what a group named “Real Values for Texas” has to say about property appraisals. Their YouTube message, and I agree, is that if the appraisals were equitable then, all the money needed to make the current school funding system equitable for all children is likely already available -- with no new taxes or increases needed. - js-

Website: Real Values For Texas

Additional information added 5/6/2014

Texas Is Losing Out on Millions of Dollars Thanks to Its Defective Property-Tax System
After the private company Houston 8th Wonder purchased the former Six Flags AstroWorld site at Kirby Drive and Loop 610 for $77 million in May 2006, the Harris County Appraisal District turned around and said the empty 104-acre lot was worth $74 million. Instead of taking the $3 million savings and going home, Houston 8th Wonder's hired-gun lawyers bulldozed HCAD more [arw]

State Policy Makers are Relying on Greater Support from Local Taxpayers in Funding Instructional Cam
This article presents insights on state policy makers apparent expectations of greater support from local taxpayers in passing local bond referendums to fund additional instructional campuses.  As shown in the chart below, the percent of state revenues to bond debt expenditures in the debt service fund has substantially declined from about 31.9% fiscal year 2002 to 11.2 % fiscal year 2013.   view article

Property Tax 101
In Texas, everyone who owns a home, building, or land pays an annual property tax bill. The amount is supposed to be based on the property’s market value. For most homeowners, appraised values are pretty accurate. Appraisal districts buy sales data for residential properties from realtors in many counties, and homes tend to be fairly consistent in value within neighborhoods.  When the appraised values are wrong, homeowners can appeal, and the process is relatively simple and generally doesn’t involve huge sums of money. view article

Tax law leads to towering savings for big-building owners
The owners of Williams Square in Irving’s Las Colinas purchased the office complex in 2012 for $226 million, then persuaded a judge to reduce the taxable value to $147 million. As a result, the company could save more than $3.5 million in taxes annually. view article

Editorial: Level Texas’ property tax playing field
If you are a homeowner, you expect your neighbors to pay their fair share of property taxes. But if that neighbor is a big commercial property, odds are that its owners are using a loophole in Texas law to elude the true value of their operations. The Legislature should put a stop to this. Dallas Morning News writer Matthew Watkins recently spotlighted the practice, which is costing municipalities millions and saddling residential owners with more of the property tax burden. A prime example was the Towers at Williams Square in Las Colinas, which has managed to use legal wrinkles to reduce the taxable value of the office complex, which sold in 2012 for $226 million, to $147 million, resulting in an annual tax savings of $3.5 million. view article

Lots of reasons not to replace property taxes with higher sales taxes
I wrote a few weeks back about talk of possible changes ahead for the state and local sales tax in Texas, and now I’ve been reminded of a 2012 study that details how difficult one of those changes would be. It’s an idea that has surfaced in the race for state comptroller. The Republican nominee, state Sen. Glenn Hegar from Katy, has suggested that the state abolish the $40 billion a year brought in by local property taxes and replace that revenue by revising and increasing the sales tax. view article.