Ask yourself this: Does anyone in Texas really own a home or place of business?
Most people’s immediate response is “Yes,” but the correct answer is really “No.”
That’s because under Texas’ current property tax system, every property owner pays an annual tax to the government. If, for whatever reason, that tax goes unpaid, then the government has the authority to seize your property.
Maddeningly, under this kind of system, no one ever truly owns property: All have been reduced to the status of “renters.” But that may soon change.
In the run-up to the next legislative session, many state lawmakers have begun to call for eliminating Texas’ property tax system, with state Rep. Harvey Hilderbran, chairman of the influential House Ways and Means Committee, the latest high-profile official to champion the idea.
In a recent interview, Hilderbran revealed his intention to file legislation next session “to begin the process of abolishing residential and commercial property taxes.”
Pressed on what he might replace it with, the chairman said he was working to flesh out the exact details, but that he was open to suggestions.
Here’s one: Abolish the property tax and replace it with a reformed sales tax in a dollar-for-dollar tax swap. By making modest adjustments to the state’s sales tax rate and base, lawmakers could keep revenues where they’re at now and also return an important freedom back to Texans.
Again, the changes need not be extreme.
In the Texas Public Policy Foundation’s report, Enhancing Texas’ Economic Growth through Tax Reform, four scenarios are outlined to make the tax swap revenue neutral, the most popular of which is one that raises the rate to 11 percent and expands the base to include most goods and services taxed in at least one other state, including the sale of property.
With these changes, property owners could see their right to own property returned without injury to government revenues.
Besides returning this important right to property owners, it’s important to point out that there are also tangible benefits to be realized.
The foundation’s study suggests that if property taxes were eliminated and the tax burden shifted from investment to consumption, state personal income has the potential to increase by $3.60 billion to $3.68 billion in the first year resulting from a massive boost in capital investment.
What’s more, because of all the increased economic activity and investment, the proposal could help create between 124.9 thousand and 337.4 thousand net new jobs over a five-year period.
Both the tangible and intangible benefits of doing away with Texas’ property tax system are too strong to ignore.
It’s time we do away with this harmful tax, secure the right of property ownership, and reap the rewards of a stronger economy and faster job growth.