Originally published at Dallas Morning News.
More conservatives are likely to be elected to the statehouse in November. This is a historic opportunity in 2025 to enact a new budget that provides property tax relief, empowers all families with universal school choice and puts state spending in Texas on a more sustainable trajectory in 2025. Texas, in a nation grappling with unsustainable government spending, stands out for its relative fiscal restraint and economic dynamism. However, despite historically prudent budgetary policies, Texas lawmakers enacted the largest two-year budget increase last year and the second-largest property tax relief measure (though many claimed it was the largest). According to the Sustainable Budget Project by Americans for Tax Reform, Texas, unlike the federal government and the vast majority of states, has done better at aligning its budget growth with the average taxpayer’s ability to pay for government spending, as measured by the rate of population growth plus inflation. Over the past decade, federal spending has escalated by an astonishing 81.7%, nearly quadrupling the 23.2% rate of population growth plus inflation, according to Americans for Tax Reform data. In stark contrast, Texas has exhibited fiscal restraint, ensuring its spending did not spiral out of control. The implications of such fiscal prudence are profound. If the federal government had followed the sustainable budget approach from 2014 to 2023, it could have saved taxpayers an estimated $2.1 trillion in 2023 alone. Texas’ measured approach during this period allowed the state to spend and tax $22.0 billion less than it might have otherwise, benefiting taxpayers and the broader economy. The recent and uncharacteristic budgetary excesses in Texas diminish the capacity for property tax relief. Further property tax reform is crucial. Property taxes are unfair, burdensome, and they keep people renting from the government by paying property taxes forever. The competitive landscape is also evolving, with states like North Carolina and Florida thriving by implementing aggressive tax cuts and regulatory reforms. Texas must respond by intensifying its commitment to pro-growth policies and fiscal conservatism if the Lone Star State is to maintain economic leadership. A constitutional spending limit, similar to Colorado’s Taxpayer Bill of Rights, would help put state spending in Texas on a sustainable trajectory. Even in a blue state where progressives are in charge, this measure has effectively kept state and local spending in check. Its adoption in Texas would ensure that state and local budgets grow in line with the average taxpayer’s ability to pay. To truly distinguish itself, Texas should consider a strategic overhaul of its tax system, particularly in property taxes. With no personal income tax, Texas could relieve property holders of a significant financial burden by eliminating school district maintenance and operations property taxes. This shift, funded through better-controlled state and local government spending, could transform the economic landscape for homeowners and businesses. The state could achieve this monumental feat by using the resulting surpluses from spending restraint to reduce school district M&O property tax rates, aiming to phase them out over the next decade. The Texas Legislature already controls the school finance formulas so this property tax is mostly “local” in name only, and legislators have been phasing it down in recent years. It’s possible to reduce and even eliminate truly local property taxes by cities, counties, and special purpose districts through spending restraint that would produce surpluses, which can then be used to drive property tax rates down to zero over time. Some localities would take longer than others to accomplish this, but as people vote with their feet to places without property taxes, other local governments would look for ways to eliminate theirs. The result would be less government spending and little to no property taxes in Texas. This shift in a pro-growth direction would enhance homeowners’ financial freedom and support more economic growth through increased personal savings and business investment. Texas’ economic policies have historically positioned the state as a leader in job creation and financial freedom, helping to achieve record economic growth, job growth and in-migration. However, the path forward requires conserving and enhancing these policies. Texas must adapt to the changing economic landscapes by fostering a more favorable business climate, reducing governmental interference, and revamping its tax system to maintain and strengthen its competitive status. By prioritizing spending restraint, strategic tax relief and universal school choice, Texas can secure a prosperous economic future and set a standard for budgetary sustainability. Grover Norquist is president of Americans for Tax Reform, a taxpayer organization founded in 1985 at the request of President Ronald Reagan. Vance Ginn is a senior fellow at ATR, president of Ginn Economic Consulting, and previously served in the White House’s Office of Management and Budget.
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Vance Ginn, Ph.D.
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