Taxinfo

Ending the Taxes 2-Step - HB 2321/HJR 156*
* A property tax solution that puts the taxpayer in control of the tax bill

Over the last 25 years, the Texas economy and population have experienced phenomenal growth. Despite recent market slowdowns, property owners continue to experience tax increases as a result of higher property values. Taxpayers have voiced complaints about the current system for as long as it has existed.

Legislative solutions have slowed but not stopped the bleeding. Bandages such the homestead appraisal cap, new exemptions, appraisal reforms, school tax buy-downs, etc. been tried. All failed to provide lasting, meaningful tax relief.

Another option is available.

HB 2321/HJR 156, filed by Representative Charlie Howard of Sugarland, will allow voters to amend the Constitution to change from a market value based property tax system to one based on what is paid or acquisition value.

Here's how it would work….you buy a property and render the purchase price to a county tax office (keeping the information confidential), apply for appropriate exemptions and wait for the tax bill each year. You are taxed on the price you paid, not what your neighbors paid. The value will not change until you sell the property (unless you increase the size or make substantial improvements). The tax bill will only increase if voters approve bonds or governments increase the tax rate placing you are in control of the tax bill.

HB 2321/HJR 156 will eliminate the need for county appraisal districts resulting in more than $300M in savings for local governments ($75M excluded in order to continue funding of specific services such as mapping properties). There would no longer be a need for the Property Value Study or appraisal district review (MAP) by the State Comptroller, resulting in $10M in savings.

Lower costs equate to lower taxes.

This is not a new idea
Tax revolts have been common throughout history. Well known taxpayer legends include Robin Hood, Zorro, Lady Godiva and the patriots of the Boston Tea Party. The most renown tax revolt in recent history occurred in 1978 when California voters petitioned for and passed Prop 13 by a 2-to-1 margin. California's market value based tax system had been pricing people out of their homes and businesses. Prop 13 was a move to a purchase price tax system. Thirty plus (30+) years later, California voters affirm support for Prop 13.

What was Prop 13?

Changed from a market-value based tax system to acquisition or sale price based
Established 1975 as the base year of value for all existing property (year of passage). It allowed and continues to allow transfer of the 1975 value to family members
Cut combined local tax rates to $1 unless approved by 2/3 of the voters
Allowed for capped increases in value of no more than 2% per year (based on CPI)
Required 2/3 vote of the Legislature to increase State tax revenues

Since inception in 1978, tax revenues in California have increased from $5.6B to $50B per year despite the slashed tax rate and low revenue limit (2%). At the 30 year anniversary of Prop 13, the Los Angeles Times reported, "...property tax revenue has been the most reliable of any tax revenue source in the state. It has not ebbed and flowed like the sales tax or, particularly, the income tax." (Proposition 13 works 6/30/08)

Thirty (30) years later, property owners continue to support Prop 13 because their taxes are "predictable". Governments like it because revenue is stable unlike the previous market-value based system.

What happened next?
Prop 13 ushered in a second California gold rush in the '80's with an unprecedented economic surge for years following its passage. In fact, the California economy became the envy of the nation with incomes growing 50% faster than the nation as a whole, job growth at twice the national pace and unleashed an entrepreneurial and commercial explosion.

Property tax revenues for local governments increased on average 7.7% over 20 years. The lowest increase any year was 3.3%. Admittedly, excessive spending by California legislators combined with overestimates of income and sales tax revenue wrecked havoc at the Capitol.

Prop 13 was not the culprit!

Is this like Prop 13?
No. HB 2321/HJR 156 do not include a tax rate reduction or revenue and appraisal caps. Only the move from a market value to purchase or sale price system are proposed.

What's next?
Texas property owners have had enough of out-of-control taxes. The November elections sent a clear demand for smaller government. Texas Legislators need to be informed of the benefit of this legislation and should give Texas voters the opportunity to approve this change to the Constitution. Overtaxed Texans need to spread the word and to contact their State Reps and Senators to encourage them to support this property tax reform.

End the Taxes 2 Step! Call your State Representative and Senator today!

"While death and taxes may be inevitable, being taxed to death is not inevitable."
Howard Jarvis, Father of Proposition 13