Posted on 01/09/2005 7:12:58 AM PST by Dubya
Texas homeowners have a reason to be angry about their property taxes: They pay some of the highest rates in the country.
One survey puts Texas at No. 3, behind only Connecticut and New Jersey. In another ranking, it's No. 5.
The bottom line is that many Texans pay thousands of dollars a year in higher real estate levies -- a bill that often shocks newcomers. It's not unusual to owe twice as much in property taxes as friends and relatives in other states, even when their homes are worth more.
Sure, we have no state income tax, and that saves residents plenty. But that doesn't mean we're a low-tax state; Texas sits right in the middle of the pack in total tax burden.
Include all state and local taxes, along with federal taxes, and Texas ranks No. 26 among the 50 states, according to the Tax Foundation in Washington.
But our tax structure has one serious negative consequence: too much of our money goes to the federal government, rather than remaining in-state.
All of this is worth examining because the Legislature starts a new session this week, with property tax relief and school finance at the top of the agenda. The issues are inextricably linked, because local property taxes account for about 60 percent of the funding for public education.
In this debate, many people argue that Texas schools need more money to do their job, especially with the state's large population of children and immigrants. But even more people argue that Texas homeowners need a break on their property taxes.
It's pretty tough to cut taxes and increase spending at the same time (unless you're running a war and a federal deficit), which is why Texas lawmakers have wrestled unsuccessfully with school funding reform for years.
Property taxes have become a greater burden in the past decade, as Texas home values have climbed. Since 1995, real estate taxes have grown much faster than incomes in Tarrant County.
The Tarrant Appraisal District pulled some records that illustrate the trend. Three homes, valued at $100,000, $200,000 and $300,000, were examined, from Fort Worth, Arlington and Colleyville, respectively. Their property tax bills were up 48 percent to 61 percent since 1995. Over the same time, incomes grew 32 percent nationally.
Not surprisingly, residents are rising up and voting to freeze taxes in several communities. And officials relay anecdotes about residents on fixed incomes who sold their properties because they couldn't afford the increases in taxes and insurance.
Unlike taxes on income or sales, property taxes can't be cut if a homeowner's earnings fall. Those taxes often keep rising.
Tax rates are often nudged up by various taxing districts. But most of the increase comes from rising home values, and Texas aggressively updates property assessments because the education system is so dependent on that money.
In 1980, most Texas homeowners paid about 1 percent of the value of their property in annual real estate taxes, said Charles Gilliland, a research economist with Texas A&M's Real Estate Center.
By 1993, that average was up to 2 percent. Today, the rate in much of Texas is 2.5 percent to 3.5 percent, he said.
The national average was 1.1 percent in 2002 for a $200,000 home, according to the Center for Public Finance Research in St. Paul, Minn.
Texas remains a bargain for some home buyers, because prices are much lower than comparable properties on the East and West coasts. But people and businesses are noticing the higher taxes.
Republican state Rep. Kent Grusendorf of Arlington, chairman of the House education committee, said he receives more complaints from constituents about property taxes than any other issue. And last week, while vacationing in Lake Tahoe, he met a California man who reiterated the point.
"He was going to move to the Hill Country to retire," Grusendorf said in a phone interview. "But he moved to Arkansas instead, because of the property taxes."
Grusendorf says lawmakers are almost certain to cut the rate: "The only question is how much," he says.
Of course, there is another question: How is Texas going to make up the money?
There's talk of revising business taxes so that more companies pay, albeit at a lower rate. About six in seven businesses currently avoid the state's franchise tax, sidestepping it through easy loopholes.
Raising the sales tax in general and on some items in particular, such as cars and trucks, is often discussed.
Nobody even floats the notion of a state income tax. Even a small levy would let the state slash property taxes and generate new funds for public education. But it's a political impossibility.
Texas is one of seven states that have no income tax, and that forces most of the cost of government onto two taxes -- sales and property. It also results in a higher federal bill, because residents in other states get to deduct their state income tax.
For at least two years, Texans will be allowed to deduct sales taxes from their federal returns, but that savings is limited to the 24 percent of taxpayers who itemize.
The additional deduction will improve our tax-burden percentages, but it's unclear how much. In 2002, Texas received 92 cents in federal spending for every $1 it sent to Washington, the Tax Foundation said.
Texas' current tax system is a boon for high earners, but it's harsh on people who are house-rich.
While lawmakers scramble for a way to cut property taxes and give more funds to education, they should try to pull off another trick: create a system that keeps more of Texans' tax money in Texas. Mitchell Schnurman's column appears Wednesdays and Sundays. (817) 390-7821 schnurman@star-telegram.com
Oh yes, that massive tax burden of legal immigrants, and those damn tax sponge children... It's never because of illegal immigrants.
Boy I can attest to that statement. In Denton county the school tax is outrageous.
Yet the price of our homes are stagnant if not depressed. When my house didnt sell recently the first thing out of the realtor's mouth was lower the price.
If our home was in California the same home
$135K in Texas would sell for $400K or more in California.
The reasoning behind this obscene difference in price according to mtge brokers and realtors is the fault of mtge brokers and what they will approve the loan for.
So who's fault is it really? And how do mtge brokers in CA get away with approving those kind of prices?? Thats earthquake, Tsunami country for goodness sake.
PA is just as bad, it's never enough money for the school districts. Our district publishes salaries for the teachers and administrators, it does not include the benefits portion. Therein lies the problem, but it will never be fixed, they get what they want.
Thank you for posting this article.
People from Texas like to bash other states for having an income tax, but meanwhile I'm paying less in taxes on a house appraised at $500,000 than I'd be paying on the same house in Dallas where it would be worth $200,000. Every state has different ways of feeding the tax beast. Not middle-aged working people pay less; maybe that's a good thing, but I don't see what's intrinsically conservative about it.
vote more than once
make EVERY vote COUNT!!!
The solution is obvious. The property tax is much too high as is the sales taxes. They can't keep raising those taxes and the inequities are ridiculous with special exemptions for cattle raising and the like.
The solution is a state income tax. I live in Texas and am paying three times the property tax and property insurance I paid in Missouri and the sales tax is about twice as high. We paid no more total taxes in Missouri than we paid in Texas and we wouldn't have all of these high rollers getting a free pass through their buddies in the legislature. Everyone knows this but it is verboten to tell the truth. Additionally, until this year those high sales taxes were not deductible from the federal taxes while state income taxes are. We are shooting ourselves in the foot.
I'm getting ready to buy a new truck. I will have to pay 6.250 sales tax. In Missouri I paid 4.125. And the regular sales tax for everything else except food and prescriptions is 8.250. So this high reliance on the sales tax is bound to be a drag on commerce.
This hits home with me. I'm thinking of selling my house in Texas because property and school taxes have become so high for someone who doesn't have homestead exemption - half the money I receive for leasing it out goes to taxes! This is no doubt due to the stadiums (stadia?), streetcars and other idiocy Houston powers-that-be have decided to build.
BS. The reasons are: Location, location, location.
The reason they won't loan you 400K on your 135K house is because no one earning enough to afford 400K wants to live where you live.
I know what you are saying. I manage and find rental property for some investors and have some myself. I hope TX makes gambling legal and uses that money to lower property taxes.
As far as insurance rates, our good ole law makers will keep right on selling us out IMO.
"I live in a suburb of Dallas and I can tell you that we pay around $6000.00 a year just in taxes on this house. Over $3000.00 of it goes to the school system. I homeschool my children so you can see how at the end of every year I am angry that I couldn't use that $3000 toward home school materials instead of funneling it into a broken public one.
Texas better get a hold of these property taxes...they are killing us."
Before moving to Texas, I lived in a very nice area of Springfield Missouri. Our property taxes were about $760.00. Moving to Texas and a smaller home, being retired and less value and I'm paying twice that after protesting the original assessment. There is house down the street from where I live and he is forking over about $10,000 a year in property taxes. And my insurance bill is over twice as high for less insurance. My former insurance carrier in Missouri (American Family) won't even do business in Texas because of the lawsuits.
This reluctance not to have a state income tax is nuts; just nuts. That would solve all of these problems immediately. And our total tax bill might even be less than we are paying now. I lived in Missouri most of my life and I know what I am talking about. Missouri is not a high tax state. Texas prides itself on not having a state income tax but as can be seen by these examples it is just plain craziness to cling to the past. It makes no sense at all.
Why not a system that keeps more of Texans' tax money for Texans? The medical and education costs for the illegals is enormous.
i was perusing the dallas morning news the other day, and there was an opinion piece by a local "republican", brand, if i remember correctly, calling for an increase in texas school taxes.
i e-mailed the news and said that the u.s. pays the most for education and gets 15th in the world for results. and that the problem in education was 2 fold: 1. some parents don't get involved in their children's education, nor do they discipline them, and 2. administrative and consultant expenses should be pared to the bone.
the news did not print my letter...yet.
Are you referring to Texas? Why wouldn't people want to live here?
California, sell those $400K homes and come and live here in Texas you could buy 3-4 homes for that amount of money, and get jobs. Plus there are some beautiful hill country areas here in Texas.
Here is something to think about Californians:
Population shifts It's obvious. Jobs equal workers. Without work, residents leave, and home sales dry up. Consider the case of southern California. Once home to a thriving defense industry, military cutbacks hit the region especially hard in the early 1990s. Some 1 million individuals left the area, according to Ingo Winzer, president of The Local Market Monitor, a real estate consulting firm that tracks housing prices nationwide. In Los Angeles, home prices shed 21 percent of their value between 1989 and 1996, with the typical house selling for $172,900. (The peak was $214,800 in 1989 following a five year, 77-percent jump.)
There you go a realestate BUST could happen anytime ibn CA.
i'm confused.
i didn't say what you say that i said.
I wish I could pay Texas real estate tax rather than the Chicago collar counties level. The bills in the previous posts seem like a nice savings to me.
oooppps SORRY! It was actually meant for : lewislynn
Is it true that the state legislature plans to change the name of the state from Texas to Taxes?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.