Though the upcoming statewide races for positions beyond governor may not have captured student attention, one idea by the leading candidate for state comptroller could have an effect on rent prices and students' ability to buy a house after graduation.
State Sen. Glenn Hegar, R-Katy — a candidate for state comptroller — recently expressed his unequivocal opposition to state property taxes, indicating he would like to get rid of the tax altogether and replace it, instead, with an increased consumption tax (i.e. sales tax).
Hegar believes property taxes put an unfair burden on citizens. As he said at an event last month, “As long as we pay taxes, we have to ask, ‘Do we really own our property?’”
Eliminating the tax, however, would not only be detrimental to all of the government programs that our tax dollars fund — including the University of Texas. It would also fail to decrease an individual’s tax burden.
According to a 2012 tax policy report, the switch from a property tax to a sales tax would necessitate a 25 percent sales tax to earn back the lost revenue.
Our state’s current maximum sales tax rate of 8.25 percent is already on the upper end — we rank 11th in the nation, according to the Tax Foundation. An increase to 25 percent would give us the highest tax rate in the nation, nearly triple Tennessee’s 9.44 percent combined state and average local sales tax rate, which is currently the highest in the nation.
Moreover, funding for cities, counties and schools would be even more vulnerable to economic ups and downs if we switched to a sales tax, since consumption spending is directly tied to our economic well-being: In times of recession, we focus our purchases on non-durables such as food and basic necessities, while, in times of plenty, consumers are more likely to splurge on expensive durables that would rake in more money for the state.
Although under current Texas law, property is only subjected to local taxation. Texans have been paying property taxes from the beginning of the republic. Though voters abolished the statewide tax through an amendment in 1982, local taxes are still allowed. So, since 1979, real and business personal property owners have paid taxes based on the appraised value of their property, according to a 2011 report by the Texas House of Representatives.
Based on figures from current Texas Comptroller Susan Combs, the total property tax levy in Travis County for 2010 was $2,303,173,357 or $2,249 per capita, putting us in the mid range for counties in Texas. The levy, and others like it, is used to fund day-to-day operational costs of government activities, as well as to service any debts. Granted, taxes have grown substantially in the past decade (188 percent from 2002-2010). But a lot of that increase has been fueled by special purpose districts, i.e. community college or water control districts.
The comptroller’s latest transparency report says that, while the taxes levied by counties and school districts have not changed substantially since 1992, the number of special purpose districts that levy property taxes has increased by more than 45 percent.
These special purpose districts have accounted for 87 percent of the growth in local entities levying property taxes since 1992. The most common types of special district property taxes are municipal utility districts, emergency services districts, hospital districts, water control and improvement districts and college districts. So the money garnered from many special property districts has literally been going to fund infrastructure projects and services, such as hospitals, libraries and community colleges, at least according to the state’s records.
Hegar’s predecessor in the comptroller’s office, provided he wins the position in the general election, was Susan Combs, who has held the position since 2006 and is retiring this year.
Combs and Hegar are both Republicans. Yet, it’s sad to think how far the party seems to have fallen since 2006. Combs, a Republican, authorized the transparency reports cited in this article that explain where our property tax dollars are going and underscore how important the tax revenue is for our state. Hegar, also a Republican — albeit perhaps a more current representation of the Republican Party in Texas — advocates for removing property taxes altogether and replacing them with an increased consumption tax, a move meant to increase the sense of ownership we have on our property, but, unsurprisingly, backed by little math whatsoever. (Admittedly, Combs had her own problems with math — her revenue estimates for the last biennium were notoriously off-base — but, unlike Hegar, she seems to grasp the basic principle of less being less.)
Granted, comptrollers and tax collectors do not write tax laws, so, even if Hegar were to win the election, he would not have the power to put in place his ludicrous new tax scheme. The fact that he chooses to campaign on a platform that he cannot even follow through with further takes away from his credibility. Voters should truly think twice before casting a ballot for him in November.