The paper examines the history behind Texas’ property tax system, recent attempts to reduce the growing magnitude of the property tax burden, and the economic effects of two options for eliminating the school maintenance and operations (M&O) property tax.
Key points from the paper include:
- Results show that the economy could expand by at least $12.5 billion and employment could increase by at least 183,000 soon after reform under either option. These results are indicative of the inefficiency from taxing mobile capital under the property tax.
- Texas’ property taxes have been a source a widespread contention for more than 20 years for many reasons, but the fact remains that the burden to Texans continues to rise.
- This paper examines the economic effects of two options—one that finances school maintenance and operations property tax reductions with a reduction in spending growth and another that replaces those property taxes with state-level sales taxes over time.
Vance Ginn, Ph.D., director of the Center for Economic Prosperity and senior economist at the Texas Public Policy Foundation provided the following statement:
“Texas has been burdened for too long by rising property taxes that have pushed too many Texans out of their home or business. This research examines options of how Texas could eliminate nearly half of the property tax burden in Texas by replacing the school M&O property tax with taxpayer dollars collected at the state level while supporting more prosperity in the process.”