Texas Has the Fifth-Highest Property Taxes in the Nation, But Do We Get What We Pay For?
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Texas rests in real estate tax ignominy, coming in fifth in WalletHub’s 2016 ranking of state property tax rates at 1.97 percent, though our media home value is the lowest of similarly taxed states at $131,400. We’re coming in behind No. 1 New Jersey (, No. 2 Illinois, No. 3 New Hampshire, and No. 4 Wisconsin. Hawaii, has the lowest property taxes in the nation, but ranks near the tippy top with median home values.
Of course, we already know that property taxes in Texas are obscene, but It’s a hard pill to swallow when we see how much we’re paying once you even the playing field. What WalletHub did was see how much taxes are paid per homeowner on a home valued at the nation’s median — $175,700.
In New Jersey, expect to pay $4,029 annually. In Illinois? $3,959. New Hampshire homeowners pay $3,698 annually. In Wisconsin, you end up shelling out $3,459 every year. And here in the Lone Star State you’ll pay a dizzying $3,392 for the privilege of owning a $175,700 home. The national average, for comparison purposes, is $2,127 annually.
Sounds pretty insane, huh? But as far as I can tell, there’s no real fix for our high property tax rate. I mean, we talk about it every year — taxes are high, and yet schools are always pinched for funds, our cities can’t keep up with infrastructure repairs, state-owned buildings are crumbling, and despite all of our good intentions, we still don’t have a functioning mass transit system (or high-speed rail).
Could our high property taxes put some people off from moving to Texas?
Yes, according to some of the experts polled by Wallet Hub. “People often consider property taxes when they decide where to retire, or if there are optional choices of state or locality relative to their work location,” says Margaret McFarland, a professor of real estate development at the University of Maryland. “Looking at property taxes alone is not a good strategy; to do a real analysis of taxes as a cost of living, all the taxes in an area would have to be considered, not just property taxes.”
Of course, Texas does have other taxes. Such as the 12th highest sales tax according to the Tax Foundation:
No wonder why Oregon is so popular. Legal marijuana AND no sales taxes! Of course, only Portland has a functional mass transit system, but the city is trying desperately to cope with the tremendous population growth that has created a housing shortage.
Some municipalities in the Dallas area have tacked on a bit to fund mass transit, of course, but the growth of DART doesn’t seem to be keeping up with overall population growth.
Speaking of transit, another facet of WalletHub’s data crunch was vehicle property taxes:
You see, only half of the United States has a vehicle property tax. Also, now I know why no one in Rhode Island knows how to drive: It costs more than $1,000 in taxes to own a car! That’s a pretty big incentive to use mass or alternative transit, don’t you think?
The Big Question: How does Texas stay competitive, address its infrastructure needs, and fully fund schools without increasing our already ridiculous property tax rate?
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A state income tax, but no one, NO ONE wants to open that door!
Exactly. I have to wonder if we’d be better off with an income tax. However, we all know that our appraisal system for real estate taxes is a joke, though reform would be nigh impossible.
The state of Texas, Cities, and Schools could privatize most services with reoccurring bids lowering costs.
Oh my, the tenured and unions will scream !
Sure! Let’s privatize public safety–police and fire-rescue. Think that will work? Privatize water and sewer–I know that will work. How about public health, public education, parks and recreation, streets and highways, zoning, etc. You know, there are valid reasons that all these functions are performed by our governments, not by private, profit-making companies. Privatization of public functions and deregulation of utility-type services has been an unmitigated disaster for the average person (although the leveraged buyout folks and the hedge fund managers have managed to eke out obscene profits over the years while using the bankruptcy laws to bail themselves out on their losing gambles). Our country’s middle class has shrunk, average wages have declined relative to inflation, and jobs (and corporate profits) are still flying overseas thanks to our globalized corporations. If our property tax laws and sales tax laws treated people more fairly (and if governments would stop giving tax abatements and handouts to corporations), we would have enough money to fund most all our public needs. But as Joanna says, that would be nigh impossible.
I agree with most of your statements Mr Stoller about privitisation, however, how can the City of Dallas’ current pension funds be funded without ever increasing property taxes?
Possibly commercial properties in Texas are not paying there fair share of taxes.
Somethings got to give in the next 10-20 years or Dallas will be considered a very high taxed city and the growth will stall
You are correct that commercial properties in Texas are not paying their fair share of taxes. Between grossly under-appraised properties and tax abatements handed out to large corporations like Halloween candy, the “real” property tax rates for businesses just shift more and more of the tax burden to residential property owners. And speaking of under-appraised properties, as long as we have “blind” property sales (where the sales price is not disclosed), we will have severely under-appraised residential and business real property, at least on the high end. The appraisal districts do a pretty good job of tracking low and mid-priced sales prices, but they are hobbled by the non-disclosure of sales prices for high-end properties. True sales prices have to be disclosed for federal income tax purposes; why not for state and local tax purposes. The present practice just enables those high-end buyers to hide the true value of their properties, and the rest of us have to subsidize their fraud.
This is ridiculous.