Politics

Eliminating Property Taxes in Texas Would Cost $81 Billion Per Year

Texas Republicans keep pushing to completely eliminate property taxes in the state, however, the measure would cost the state over $81 billion per year.

The idea of eliminating property taxes has been a wild dream for some Republicans, however, the proposal has been received with skepticism by others. Lt. Gov. Dan Patrick, tasked lawmakers earlier this year with tallying the costs.

On Wednesday, the Texas Senate Finance Committee revealed that to offset the loss of revenue from property taxes, the state would need to come up with $81.5 billion annually. This includes $39.5 billion in school district property taxes and another $42 billion from cities, counties, and special districts.

This $81.5 billion required to eliminate property taxes would need to be compensated by other taxes or be cut from the state budget. According to the Austin American-Statesman, compensating for the loss would mean increasing sales taxes to 22%, while cutting the state budget would mean forgoing over half of Texas’ current two-year budget of $144 billion.

According to the Texas Tribune, increasing sales taxes could disproportionately affect low-income families because these taxes make up a higher share of their income than they do for other families with higher incomes.

“Hitting low- and middle-income Texas families with this dramatically higher rate would seriously damage both their household budgets and the state economy as a whole,” Shannon Halbrook, a fiscal analyst at the left-leaning Every Texan, said on Wednesday.

The proposal to eliminate property taxes could also negatively affect the state’s public education system, which heavily relies on property taxes to fund teacher salaries and new facilities. On Wednesday, Mike Morath, commissioner of the Texas Education Agency told lawmakers that recent tax reforms have meant massive drops in how much money districts send to the state.

“In the most recent school year, recapture would have been $10 billion in the school finance system,” Morath said. “Instead, with those three acts of sort of tax policy, recapture was $2.7 billion.”

Despite this, Gov. Greg Abbott and Patrick have pushed for more property tax reliefs. For example, Abbott said earlier this year that the Legislature should continue to hammer away at property taxes “until we get rid of the school property tax rate here in the state of Texas.”

RA Staff

Written by RA News staff.

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