How These Two Policies Contributed To The Present Property Tax Crisis In Texas

Mike Collier – democratic candidate for lieutenant governor opens up about the two policies that made the property taxes in Texas to fall into crisis.

Texas is a wealthy state, and the government is not wasting any money, but still property taxes are so high. mike Collier explains why,

1. Equal and Uniform law

Legislature of Texas has passed an Equal and Uniform law in 1997, in which the property owners can fight against the appraisal district if they can show that the comparable property of them is appraised at lower values than their own. This sounds good and logical as a concept, but this has left an unintended loophole to the owners with large, industrial and commercial properties. The theme is, if one owns a complex asset and talented lawyers, then it is really not needed to pay the fair amount of taxes to the government of Texas. Mike Collier says closing the loophole is a chief element of his agenda on tax reform, as a lieutenant governor.

2. Tax Swap 

In 2006, there was a tax swap did by the state. This tax swap has dug a big hole in the state’s budget. Recently, Texans has presented a tax revolt, through their local school districts, charging the state. Finally, Texans has won and state lost. In order to obey the court, property tax had a cut and created business margin tax to counter it. This idea is to keep the tax revenue unchanged and also to provide relief to the homeowners. But the creation of margin tax was a total disaster. The margin tax was passed, knowing they could recover the lost revenue through slow and steady increase in property values, thereby compensating the loss.

This idea worked. By 2013, the property taxes had climbed up and the state government had reduced the margin tax by 5 percent. This 5 percent dip in margin tax was not noticed and they cut the margin tax by another 5 percent in the following year. Again it remained unnoticed. So, there was another cut which reduced another whooping 25 percent. Another thing is a structural shortage caused by the failed tax swap that happened in 2006, summed with the margin tax cuts in 2013 and 2015. So these actions had forced local property taxpayers to compensate a greater share in terms of public education, and the property taxpayers had to take up greater share of local property taxes.
Through the Equal and Uniform loophole, homeowners will get roughly double the burden. Mike Collier said that if he is elected, he will be honest about all these type of issues, which is the only way to eradicate the property tax crisis.