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

WORKING POOR HURT MOST BY PROPERTY TAXES

12/27/2015

 
This commentary, written by Dr. Vance Ginn and Nozim Ishankulov, originally appeared in print in the Midland Reporter-Telegram on December 27, 2015.


Despite slower economic activity in Midland County, property taxes owed continue to skyrocket. Therefore, lawmakers should consider options to provide permanent relief of these onerous taxes to fund essential local government services.


Contributing to the slower economy is a sustained drop in oil prices that’s led to a 22 percent decline in active rigs to only 32 in the County according to Baker Hughes. Less employment related to oil and gas activity has pushed the unemployment rate up from a cyclical low of 2.2 percent last December to 3.5 percent in October.


Although this mild slowdown suggests a weaker housing market, homeowners noticed that their home appraisal increased, on average, by 12 percent. They would ordinarily cheer the increase as it improves their wealth, but it also means that they face higher property tax bills that may not be associated with an increase in income.


Add to that the 11 percent increase in the County’s property tax rate excluding any other changes and many will risk living paycheck-to-paycheck or losing their home from a mounting property tax burden. This isn’t just in Midland, homeowners statewide face the 14th highest property tax burden in the nation according to the Tax Foundation.


Increases in the average appraisal value and tax rate in Midland will hurt those with low and fixed income the most, particularly the working poor and elderly, as property taxes rise from factors out of their control. A new school nearby may raise their home value forcing them to move to another area with cheaper housing and worse living conditions.


This type of life-changing event determined by the government and not voluntary exchanges in a market has reasonably created unrest among homeowners. For example, there were 701 people in Midland who signed a petition protesting the increase in the County’s property tax rate. Being politically engaged is important to confront higher taxes from excessive spending, but far too often citizens are unaware of their property tax liability.


To alleviate some of this burden, last month voters overwhelmingly approved the constitutional amendment passed by the Texas Legislature known as Prop 1. It increases the homestead exemption for school property taxes by $10,000 to $25,000. The recent Texas Public Policy Foundation’s report The Freedom to Own Property outlines how this will provide only short-term relief while eliminating property taxes and replacing lost revenue with a reformed sales tax advances liberty and prosperity.


The reformed sales tax could be as low as an 11 percent total rate compared with the current 8.25 percent state and local combined rate by broadening the base to include the sale of property and most goods and services taxed in at least one other state.


Unlike property taxes that are many times hidden in homeowners’ escrow account or in renters’ rent, the sales tax is easy to see on every receipt. While property taxes must be paid regardless of affordability, the sales tax is based on an individual’s discretion to purchase something.


By having more disposable income from paying lower mortgage payments and rent, Texans can allocate their income as they see fit whether it be to put food on their table, save for a rainy day, or hire new workers. Research highlighted in the Foundation’s paper finds that this swap could lead to substantial economic gains in the ballpark of $60 billion in new personal income and 340,000 new jobs over five years compared with the current trajectory.


Finally, and most importantly, this swap gives Texans the freedom to own property instead of renting from the government.


​​For the working poor and all Texans to benefit from owning property, more job opportunities, and more economic prosperity, lawmakers should consider long-term solutions to resolve skyrocketing property taxes with ending them being the best option.

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

    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
    Immigration
    Inflation
    Interview
    Jobs Report
    Let People Prosper
    Licensing
    Louisiana
    Margin Tax
    Medicaid
    Minimum Wage
    Occupational Licensing
    Opportunity Project
    Pensions
    Podcast
    Poverty
    Property Taxes
    RAB
    Regulation
    Rules
    School Choice
    Socialism
    Spending Limits
    Taxes
    Tax Foundation
    Testimony
    Texas
    Transparency
    Video
    White House

    RSS Feed

Proudly powered by Weebly