Texans Pay Some of the Highest Property Taxes in the Country

When it comes to property taxes, Texas homeowners pay some of the highest residential property taxes in the country, the research group Attom Data Solutions said last week.

According to economist Daren Blomquist, only New Jersey, Illinois, and Vermont posted higher effective property tax rates last year than then 2.15 percent Texans paid.

The company’s analysis showed nationwide that property taxes levied on single-family homes totaled $293.4 billion, up 6 percent rom $277.7 billion in 2016, for an effective average tax rate of 1.17 percent.

Dallas County residents paid an effective tax rate of 2.23 percent last year, while Tarrant County and Collin County paid 2.17 percent and 1.96 percent, respectively.

Collin County residents paid an average of $7,365 in taxes, while Tarrant and Dallas County residents paid  $5,180 and $6,117.

But those higher tax rates haven’t necessarily turned people off from moving to Texas. Blomquist told Marketwatch that among the counties seeing the biggest percentage of in-migration in 2017, all are in Texas, Florida, Georgia, or the Carolinas. This means that the higher property taxes are offset by the fact that Texas has no personal income tax.

That’s not to say that the higher tax rates aren’t impacting Texans. Last week, the Texas Commission on Public School Finance met in Austin to hold a hearing about property taxes, and heard testimony from a variety of taxpayers, all of whom spoke about the impact higher taxes — and the recapture that many school districts face — has on homeowners and small business owners.

The Texas Comptroller’s office told the committee that state revenues are currently running ahead of estimates for 2018, but that didn’t necessarily mean there would be more money in the general fund coffers.

As the committee wrestles with ways to improve public school finance, consultant and former chief revenue estimator James Le Bas told the group that efforts to moderate property tax increases would be difficult.

“History would suggest that periodic successes are feasible, but that a lasting solution that is satisfactory to all may be hard to come up with,” he said.

One such solution bandied about is an increase in sales tax. The Center for Public Policy Priorities released a brief last week that warned that replacing property taxes with higher sales taxes was an iffy proposition at best.

“A risky scheme like raising the sales tax rate could give Texas the highest rate in the country and hurt the Texas economy,” the brief read. “Relying even more on sales taxes would make public services more vulnerable to economic fluctuations and shift the responsibility for funding these services onto the Texas families least able to afford it.”

“During the 2016-17 school year, the school maintenance and operations (M&O) property tax raised $23.7 billion, and the state sales tax of 6.25 cents brought in $28.9 billion,” the CPPP said. “Therefore replacing school M&O property taxes would require an increase in the state sales tax of more than five cents.”

Doing so, the group explained, “ would gut the ability of local communities to decide how much to invest in their children.”

“Because there would no longer be a local tax rate set by the local school board, with approval of local voters through an election, all funding would be decided at the state level,” the brief continued.

“Instead, lawmakers should guarantee that everyone is paying their fair share of supporting our public services by ensuring that all property – especially commercial and industrial property – is on the tax rolls for its full market value,” the brief stated.

The commission is working on a deadline – its report to the governor and the Texas legislature with recommendations on how to improve school finance is due at the end of this year.