Vance Ginn Economics
  • Home
  • About
  • CV
  • Media
  • Blog/Research
  • Podcast/Speeches
  • Publications
  • Teaching
    • ECON 2301-Princ of Macro
    • ECON 2302-Princ of Micro
    • ECON 3352-Energy Eco
  • Home
  • About
  • CV
  • Media
  • Blog/Research
  • Podcast/Speeches
  • Publications
  • Teaching
    • ECON 2301-Princ of Macro
    • ECON 2302-Princ of Micro
    • ECON 3352-Energy Eco

Dream Big: We Can Eliminate School District M&O Property Taxes

4/19/2021

 
In Texas, we dream big. That’s what House Bill 59 does—it imagines a Texas that lightens the tax burden on Texans, upholds property rights and ensures that education is properly funded.

Authored by Rep. Andrew Murr, R-Junction, the bill would eliminate the school maintenance and operations portion of your property tax bill on Jan. 1, 2024, and would create a legislative commission that would use the intervening time to study the best way to replace that revenue. This bill would cut local property taxes nearly in half while adhering to the state’s constitutional responsibility of funding government schools.

The key to achieving this, of course, is restraining government spending at the state and local government levels.

The fact is that the skyrocketing local property tax burden remains one of the state’s most pressing policy challenges. Property taxes have been growing faster than the average taxpayer’s ability to pay for them. Any growth over population-plus-inflation represents a growth in government above our ability to pay. For more on this formula, which we call the Conservative Texas Budget, click here.

According to the Tax Foundation, Texas has the seventh most burdensome property tax on homeowners. Using a different calculation, Fox News ranks Texas third-worst.

Too many have been forced out of their homes and businesses because of rapidly rising property taxes.

It would be great to eliminate all property taxes, which tend to hurt lower-income earners the most, so Texans can stop effectively renting from the government forever.

A good start in that process would be to eliminate school district M&O property taxes, which account for nearly half of the total property tax burden on Texans. Eliminating just the school district M&O property taxes is rather straightforward because the state determines the funding formulas for the school finance system, and it represents nearly half of the property tax levy across the state.

The question is how to replace this revenue. That’s easy—with a broader-based sales tax.

State sales taxes have grown far less than property taxes, less than personal income, and more closely with population growth plus inflation. This indicates that moving to a system based on the sales tax better aligns with the average taxpayer’s ability to pay for these taxes that fund government spending over time.

There are some important reasons why a sales tax is the better way to fund schools.

First, property taxes are inefficient. Property taxes in Texas are based primarily on subjective valuations by appraisal review boards and tax rates determined by local tax entities with little to no feedback from citizens, creating a highly inefficient collection mechanism.

Next, property taxes are more regressive than sales taxes. Sales taxes are paid once at purchase, yet property taxes are paid annually, hurting low- and fixed-income Texans the most because the costs compound over time. A high property tax also prevents many low-income earners from purchasing their first home and forces many others who do purchase to struggle to keep their home—they may even lose it.

Finally, during recessions (like the recent pandemic), lower-income earners tend to face the highest levels of unemployment and are least able to shoulder a tax burden. Their property tax burden, however, would increase relative to their income, while their sales tax burden would fall more proportionately with their income.

The sales tax is money that comes directly from the choices of consumers. It ensures that all financial power remains within their control, whereas property taxes are a burden that is forced upon all taxpayers with little means of working around it.

It would work—and result in fully funding schools based on the state’s school finance system.

Economists of the Baker Institute at Rice University studied the economic effects of replacing property taxes with sales taxes over time. They found that just a 3.6% decrease in school district M&O property taxes could contribute to a $14.3 billion increase in economic output and 217,000 new jobs after just the first year of reforms and more thereafter. Imagine if we eliminated that burden!

By combining property tax reductions and reform with spending limitations, Texas could shift to a more efficient and fairer sales tax system. In this way, Texans can be assured meaningful, lasting, property tax relief and an improved Texas Model that will sustain economic prosperity for generations.

https://thecannononline.com/dream-big-we-can-eliminate-school-district-mo-property-taxes/

Comments are closed.

    Vance Ginn, Ph.D.
    Chief Economist
    ​TPPF
    ​#LetPeopleProsper

    Vance Ginn, Ph.D., is founder and president of Ginn Economic Consulting, LLC. He is chief economist at Pelican Institute for Public Policy and senior fellow at Young Americans for Liberty and other institutions. He previously served as the associate director for economic policy of the White House’s Office of Management and Budget, 2019-20.

    Follow him on Twitter: @vanceginn

    View my profile on LinkedIn

    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    January 2015
    November 2013
    September 2013
    May 2013
    February 2013
    August 2012
    July 2012
    January 2012
    May 2011
    April 2011

    Categories

    All
    Biden
    Book Reviews
    Budgets
    Capitalism
    Carbon Tax
    Congress
    COVID
    Debt
    Economic Freedom
    Economic Prosperity
    Economy
    Education
    Energy Markets
    Fed
    Free Trade
    Ginn Economic Brief
    Healthcare
    Housing
    Immigration
    Inflation
    Interview
    Jobs Report
    Let People Prosper
    Licensing
    Louisiana
    Margin Tax
    Medicaid
    Minimum Wage
    News
    Occupational Licensing
    Opportunity Project
    Pensions
    Podcast
    Poverty
    Property Taxes
    RAB
    Regulation
    Rules
    School Choice
    Socialism
    Spending Limits
    Taxes
    Tax Foundation
    Testimony
    Texas
    This Week's Economy
    Transparency
    Video
    White House

    RSS Feed

Proudly powered by Weebly