What would it take for Texans to permanently rid themselves of the property tax system?
That’s the question our new report, “Enhancing Texas’ Economic Growth Through Tax Reform,” tries to answer – and the results are intriguing.
According to the study, property taxes in Texas could be eliminated completely by simply broadening the sales tax base and adjusting the total sales tax rate. The study offers legislators four options to modify the sales tax:
– 6.5 percent, if the sales tax base is the total value of goods and services in the state’s economy; – 9 percent, if all the services that are taxed in at least one other state are taxed; – 12.5 percent, if the current sales tax base is used while levying a tax on property sold; or – 14.5 percent, if the current sales tax base is used.
Using an expanded sales tax instead of the current property tax system would free Texans from the fear of losing their home due to unpaid property tax bills. It would prevent government from penalizing people who are investing in their homes and businesses. And it would also create jobs.
Across a five-year time horizon, Texas could create between 127,700 and 312,700 net new jobs by replacing our property tax system with an expanded sales tax. These are jobs that would otherwise not be created at all.
The empirical evidence is there: Texas wins with a tax system swap. The next step lies in the hands of the legislature.
– James Quintero