Texans For Fiscal Responsibility Want To Do Away With Property Taxes To Fund Education
By Vince Leibowitz on Jun 13, 2008 in Texas Public Policy & Taxation ![[Post to Twitter]](/wp-content/plugins/tweet-this/icons/tt-twitter.png){kind=icon}
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Once again, we have a tidbit of something far less than sheer brilliance from the folks at Texans for Fiscal Responsibility:
For decades the school property tax that funds “maintenance and operations” has been causing troubles for taxpayers – skyrocketing burdens, lawsuits and general confusion. Legislators, taxpayers, school boards and judges have all taken cracks at reforming a system that is fundamentally irreparable.
As you know property taxes are a horrible way to fund government, turning every Texan into a renter while deterring job creation. Property tax burdens essentially double every 7.5 years! And for most folks, retirement funds will be completely depleted by a property tax system that devours everything in its path.
Now a group of legislators are looking to do something about it: Abolishing the tax altogether! This is an idea whose time has not already come, but the people are cheering loudly for it. You can join the winning battle!
First, let’s take a crack at some myth-busting:
Legislators, taxpayers, school boards and judges have all taken cracks at reforming a system that is fundamentally irreparable.
Really? I guess someone has forgotten how government works, because the only one of those four groups listed that can “reform” anything is the Texas Legislature. School boards do not devise a tax system and judges, while they may deem something constitutional or not, do not create legislative reforms (unless it is absent legislative action as ordered)
Then, this:
As you know property taxes are a horrible way to fund government, turning every Texan into a renter while deterring job creation…
“Turn every Texan into a renter?” That is so bogus. As for deterring “job creation,” I guess that Texans for Fiscal Responsibility has failed to remember that Texas has a law called the Texas Economic Development Act that is designed to address this issue. Far from being used too little, the Act is actually most often criticized because it allows cities to essentially hand out corporate welfare.
And, finally:
And for most folks, retirement funds will be completely depleted by a property tax system that devours everything in its path.
Where in the world does this come from? First of all, if you consider most Texans who own homes with mortgages, their property taxes are rolled into the note at closing through either escrow or monthly impound and are paid by the mortgage company when they come due.
Too, Texans for Fiscal Responsibility obviously doesn’t realize that those Texans whose property taxes aren’t taken care of via monthly impound or escrow can, if they have a conventional mortgage, refinance and fold those taxes into the new loan, while getting a lower interest rate to boot.
Furthermore, for people with defined benefit pension plans and 401(k) funds, it isn’t exactly like you can whip down to the local credit union and make a withdrawal. With most 401(k) funds, you have to show a significant hardship, i.e. an impending foreclosure, to gain access to funds. Or, you can borrow against a 401(k). If you have a defined-benefit pension plan, however, you can’t withdraw anything until retirement.
As for retired individuals, especially those over the age set forth in the statute, school property taxes are frozen. This segment of the population, which is rapidly growing, doesn’t see the alleged doubling every 7.5 years.Of course, all of this mythological fantasy is nothing more than an excuse to pimp out State Rep. Phil King’s new tax plan, which most people have already determined is equivalent to parakeet cage lining in terms of classifications of future legislation:
State Rep. Phil King of Weatherford has put forward an innovative plan that would eliminate the school M&O property tax – the largest portion of the property tax burden. (A conversation I had with Rep. King on the issue is found at the right, as is a conversation with his colleague, State Rep. Bryan Hughes of Mineola.)
Essentially, the plan would use surplus funds (the state looks to have another $10 billion to $15 billion surplus this biennium), eliminate exemptions to the current sales tax, some fiscal discipline, and then consider a slight rate increase. And be completely rid of two-thirds of the property tax burden!
In other words, to protect wealthy corporations from paying property taxes, we would expand and increase the state’s single-most regressive tax.
Expand? Yep, that’s right. Over-the-counter medications, food products, and a host of other goods presently not subject to the sales tax would have to be taxed in order to make King’s plan come anywhere close to working.
All the King plan amounts to, plain and simple, is shifting the tax burden onto the middle class and working poor.
And, when a right-wing group uses the phrase, “some physical discipline,” you know the middle class and poor are going to get screwed. Translated from right-wing speak to Standard American English, “some physical discipline,” means massive cuts to health and human services programs, massive cuts to secondary and higher education, and massive cuts in all government services–except those necessary to facilitate whatever corporate welfare big business happens to want at any given moment.
As for draining the surplus, how wise, really is that? I believe we’ve been down that road before; we’ve already exhausted much of the surplus we had to pay for bogus property tax reductions. Will the anti-tax wingnuts only be satisfied when our state is broke at the expense of making sure the wealthy have as little a tax burden as possible?
And, one last huge lie from Texans for Fiscal Responsibility:
Economists have long known that the sales tax is inherently more just – and especially the poor – than property taxes, income taxes and business taxes. Rather taxing the product of hard work, penalizing thriftiness or discouraging job creation, sales tax burdens are controlled by the taxpayer – how much you pay is based on how much you spend on items beyond food.
What economists? Every economist knows that sales taxes are the most regressive of taxes. They are not “more just,” and it doesn’t take a Nobel-prize winning economist to tell you that. Ask someone who works at Wal-Mart.
A truly just plan would be something like this, or a tax system with more reliance on a VAT.
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I think this issue tends to bring out the relentless “stupid” in everyone. The Corporatists, (Repubs), are of course always eager to have their cake and eat it too. Having benefited from the mortgage interest expense deduction in the pursuit of accumulating wealth, they now want to eliminate the property tax such that they can retire expense free while replacing the property tax with “sales taxes”. Avid Democrats of course can’t abide by anyone getting off for nothing and enjoy the thought of taking the retiree’s last dime before they shuffle off their mortal coil. There are numerous truths here. First, the property taxes do indeed, if you give it a bit more thought, turn everyone in Texas into a “renter”; no one ever really owns a home here because of the ever burgeoning property tax. This means of course that as the bloated Yuppies slip into retirement prior to their ultimate demise as landfill, they are ever more eyeing low property tax jurisdictions and are, on a national scale, pushing back against the property tax. My wife and I had considered retiring here and we’ve purchased a modest home far from the crime ridden urban pits of despair to enjoy the country life only to receive a notice from the county that they’ve raised the appraised value from $54,000.00 to $78,000.00. There’s no basis for that valuation, home prices are falling everywhere; there are no comparable sales in this neighborhood and the brings up my second point. Local property taxes are assessed on behalf of capricious and arbitrary local boards with no oversight. They are, plan and simple, greedy.
You’re correct, the sales tax is equally unfair. There are only three “fair” solutions to this problem. 1) a State Income Tax which taxes workers who are usually of child bearing years, and which has the effect of keeping Texas money in Texas first! 2) a Corporate tax. The primary beneficiary, after the parents and children, of a high quality education system are the employes. They should bear part of the cost and 3) a tax on the Parents. There’s no such thing as a “free” education and they are the ones creating the need for the education system. Another solution is to tax remittances from the immigrants to their family’s to the south.
Anyway, knowing that “smart” is never doable in a Nation where “stupid” never takes a holiday, we’re now looking at retirment in Mexico. Good luck!