Throughout Texas, employers and homeowners are making increasingly tough decisions. Property taxes are rising; people lose their businesses and homes when they’re unable to pay. In fact, from 1998 to 2017, property taxes were up 212 percent, which was nearly twice that of the average taxpayer’s ability to pay.
That’s why the Texas Public Policy Foundation has developed a new plan to significantly lower property taxes — so families and small businesses can thrive instead of being driven out of the cities and towns they love.
Specifically, the proposal would gradually eliminate the school maintenance and operations (M&O) property tax, which represents nearly half the local property tax burden. Under the TPPF plan, people pay a lower property tax bill.
The TPPF plan would use state surplus dollars in general revenue-related funds to buydown the school M&O property tax over time ensuring that priorities like public education remain properly funded. In the TPPF proposal, we don’t lower one tax just to raise another, the state increases its share of public education funding, and taxpayers are protected from out-of-control spending.
It wouldn’t happen overnight. Depending on general revenue-related growth and how much spending restraint the Texas Legislature makes in other areas of the budget while funding education, the complete buydown could take roughly a decade.
But the Texas Legislature must act this session. TPPF has the plan to move Texas in the right direction.
Note: Savings are calculated using the cumulative difference each year with the “current tax” increasing by the 6.3% average annual growth rate of total property taxes in the 1996-2016 period. The “TPPF proposal” lowers the school M&O property tax (45% of total property tax burden), including Robin Hood, until eliminated after 12 years, while other property taxes (55% of total property tax burden) increase at 2.5%.