Testimony Before Texas House Ways & Means Committee on Eliminating Property Taxes (HB 285)

8/2/2017

I appreciated the opportunity to testify before the Texas House Ways & Means Committee regarding eliminating property taxes in Texas and replacing them with a reformed sales tax that would have a sufficiently broad base for the lowest rate, along with making structural reforms to local spending.

House Bill 285 would eliminate school district M&O property taxes and replace them with a 12 percent sales tax rate, which would leave other property taxes in place that have risen at a faster rate while not expanding the tax base to achieve a lower rate. Regardless, the Foundation is encouraged with the discussion about eliminating property taxes.

But there are ways to improve this bill and others discussed at the hearing that would take only a piecemeal approach in eliminating property taxes, which both property taxes and sales taxes should never be on property. The elimination of all property taxes should be combined with structural reforms to student-centered funding in public education and spending limits on local governments, which excessive spending is the true driver of higher tax burdens.

I provided in-depth research and data on these issues to hopefully move the ball toward eliminating burdensome property taxes on Texans once and for all.

Check out the press release here: http://mailchi.mp/texaspolicy/today-tppfs-vance-ginn-to-testify-on-eliminating-property-taxes-in-texas.

Below is my written testimony with links to data and other research:

Testimony on HB 285
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Walter Rybeck

8/3/2017 08:09:09 am

What the proposal ignores is that the property tax is both one of the worst taxes and one of the best.

The worst part is the tax on improvements--houses, commercial structures, factories,barns, orchards. Taxing improvements discourages their creation and penalizes good maintenance.

The best part is the tax on the land or location value of each parcel. It lets the property owners pay for the privilege of the special benefits their sites enjoys, not through any efforts or contributions on their part, but due to the community-provided amenities such as roads, schools, police protection and so forth. Failure to collect this land tax promotes land speculation which undermines the economic health of communities and distorts the free market of the development industry.

What's needed therefore is not elimination of the property tax but rather a major reduction (or elimination) of the portion of the tax that falls on man-made improvements. Many examples of where this has been done reveal that it results in less urban sprawl, fewer slums, revived downtowns and more affordable housing.

Dan Sullivan link

8/4/2017 11:13:51 am

Property tax keeps housing prices stable and affordable. Consider that the two fastest-growing states during the last half of the 20th Century were Texas and California. Yet real estate prices rose slowly and steadily in Texas, but in California, after they restricted property taxes with Prop 13, real estate prices rapidly rose and fell, making it and Nevada the leading states for mortgage foreclosures. (Nevada also has very low real estate taxes due to revenue from minerals and from gambling.)

Before Prop 13, California's "affordability index" was only 10% higher than the national index. Today it is well over 3 times as high. 23 of the 25 least affordable cities in the country are in California.

Meanwhile, for of the six *most* affordable cities are in Texas (Abilene, Wichita Falls, Corpus Christi and San Antonio). Lest anyone think this affordability difference is due to climate, let me point out that dusty nasty Bakersfield, with nothing but vinyards and oil derricks, is less affordable than Austin, the garden city of Texas.

Sales tax, on the other hand, is the most economically destructive tax one could choose. It helps established monopolies by falling particularly hard on new startup businesses, whose profits are often far less than the sales tax would take away.

The *only* bad feature of property tax is that elderly residents pay it. This can be offset by giving each municipality the power to give a per capita grant to people over 65. The rebate could be up to the amount paid in property taxes on homes with elderly people in them.

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Testimony Before Texas House Ways & Means Committee on Eliminating Property Taxes (HB 285)

Vance Ginn, Ph.D.
@LetPeopleProsper

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Testimony Before Texas House Ways & Means Committee on Eliminating Property Taxes (HB 285)

Vance Ginn, Ph.D.​@LetPeopleProsper

Categories

Vance Ginn, Ph.D.
@LetPeopleProsper