HB 1050 - Ad Valorem Tax Reform

[treadlightly]

The only good thing about property tax is that we don't have income tax. I have coworkers in Ohio who work at home one day a week. If they live outside the city they can cut their city income tax by 20% by working at home like that. City income tax. That's how bad it can get.

I make good money but I have property, some inherited, that won't sell and won't pay its own way. I'm screwed. I have a rent house that makes $550 a month in rent but looks really nice because the renter is obsessive about neatness. It's taxed at just shy of $3,000 a year. I should get more rent, but I have a perfect renter who really can't pay any more than $550. I don't want to lose him.

My property tax amounts to about 20% of my gross income. I'd rather not discuss actual numbers on an open forum. I'm looking at borrowing around $15K in the next couple of weeks to clear the tax hurdle.

The penalties are wicked. One does not run late on Texas property tax.

Protesting taxes is an exercise in futility.

Last year, after protesting my taxes, I did a Public Information Act request to the local Appraisal Review Board. They didn't answer on advice of counsel, who claimed the Appraisal Review Board isn't a government entity - despite their power to subpoena. Plus, he said, they didn't keep any records.

Huh. No records. And state law requires them to keep minutes, at least - but no records here. Right. Got it.

But maybe there's life after ad valorem taxes with this proposed law. I can't say it wouldn't be a warm, comforting feeling to see the contract tax appraiser out of work, sleeping in one of his over-appraised shacks, wondering how to make ends meet.

[The Annoyed Man]

Sales tax as they are now, encourages Texans to spend their money through the interwebs at non Texas companies. I have even slowed down my Amazon purchases because of the Taxes... That 7-8% makes a big difference in my purchasing decisions. These days I find very little reason to go to wally world and Target or even Home Depot. and make almost all my choices over the Interwebs,, and almost completely avoid Texas companies.

And that, my friend, is called "taxpayer choice".

[apvonkanel]

I can understand the utility of having an educated citizenry, and that requires funding. However, these days schools are more worried about indoctrinating kids into becoming anti-capitalist social justice warriors than in turning out young folks with useful skills. The idea of basic public education, as it currently stands, has become a waste of taxpayer money in large regard. If they are going to take our money, then we should at least be given value for that money. The property tax isn't going away, but we need some SERIOUS reform in our public school systems.

I have to disagree with a couple sentences here. The schools are teaching what they're told they have to teach by a government that will cut funding if they stray, and a majority of those threatening to cut funding are also manipulating the data to make it look bad enough to justify it. When private-school lobbyists are financially encouraging legislators to move towards a complete dismantling of publicly provided education to minors, it is in their best interest to set the system up for failure. We can all see that this has been quite successful.

[Liberty]

Sales tax as they are now, encourages Texans to spend their money through the interwebs at non Texas companies. I have even slowed down my Amazon purchases because of the Taxes... That 7-8% makes a big difference in my purchasing decisions. These days I find very little reason to go to wally world and Target or even Home Depot. and make almost all my choices over the Interwebs,, and almost completely avoid Texas companies.

And that, my friend, is called "taxpayer choice".

But the choices are made at Texas business and employers expense. Our current 7-8% is hard on businesses now. How much more business will be avoided at another 5% or more. I don't like my property taxes any more than anyone else. They are regressive and painful, but after seeing your taxbill, I am feeling grateful. I looked at what the taxrates very closely before I bought my home and had a large part of the decision of what I bought and where I bought it. Funny thing is though the areas near me that have high taxes in my area seem to be doing quite well. Many of the lower taxed towns not so well.

[treadlightly]

Sales tax as they are now, encourages Texans to spend their money through the interwebs at non Texas companies. I have even slowed down my Amazon purchases because of the Taxes... That 7-8% makes a big difference in my purchasing decisions. These days I find very little reason to go to wally world and Target or even Home Depot. and make almost all my choices over the Interwebs,, and almost completely avoid Texas companies.

You've probably never heard of use tax, the tax you're supposed to pay in lieu of sales tax if you buy from out of state.

The state does not currently enforce it for anyone who does not have a sales tax permit. Of course, the permit itself is an odd thing. It is a permit to allow you to submit to state demands to be their tax collector.

Basically, though, we are required to pay an equivalent amount of use tax for anything we buy out of state. The reason we don't pay sales tax, where that's the case, is because the seller doesn't have a Texas sales tax permit.

But the tax is still owed.

Don't worry. I won't rat you out.

The primary enforcement of use tax is in the case where a sales tax permit holder buys something without paying sales tax, yet ends up using it instead of reselling it. For instance, if Walmart pulls a jug of floor cleaner off the shelf to clean up a mess, they are supposed to pay use tax.

[The Annoyed Man]

Sales tax as they are now, encourages Texans to spend their money through the interwebs at non Texas companies. I have even slowed down my Amazon purchases because of the Taxes... That 7-8% makes a big difference in my purchasing decisions. These days I find very little reason to go to wally world and Target or even Home Depot. and make almost all my choices over the Interwebs,, and almost completely avoid Texas companies.

You've probably never heard of use tax, the tax you're supposed to pay in lieu of sales tax if you buy from out of state.

The state does not currently enforce it for anyone who does not have a sales tax permit. Of course, the permit itself is an odd thing. It is a permit to allow you to submit to state demands to be their tax collector.

Basically, though, we are required to pay an equivalent amount of use tax for anything we buy out of state. The reason we don't pay sales tax, where that's the case, is because the seller doesn't have a Texas sales tax permit.

But the tax is still owed.

Don't worry. I won't rat you out.

The primary enforcement of use tax is in the case where a sales tax permit holder buys something without paying sales tax, yet ends up using it instead of reselling it. For instance, if Walmart pulls a jug of floor cleaner off the shelf to clean up a mess, they are supposed to pay use tax.

California has a much more [sarcasm]enlightened[/sarcasm] use tax system. A business buys a desktop computer, and pays a sales tax on the purchase. Then, they get to pay a use tax each year, equal to the percentage of sales tax paid for the first year, and then tied to the depreciating value each year according to the allowed depreciation schedule. So if they buy a $1,000 computer at 8.25% sales tax ($82.50) this year, then at the end of the year, they "get" to pay a use tax of $82.50. If it depreciates to a value of $850 in the 2nd year, then the business will pay another $70.13 in use tax.......and so on and so on. You could argue that it's not that much money in the scheme of things, but when you're a company that buys computers 500 at a time, that use tax adds up. And forget computers........I worked for a printing company at the time. A decent 5 color printing press with a UV coating station can easily cost $2,000,000. That's $165,000 in sales tax, plus another $165,000 in use tax at the end of the year. If the depreciation schedule allows, say a $250,000 depreciation after a year, then the business "gets" to pay another $144,375 for the 2nd year......and so on and so on.

The printing company owner has to figure into his cost of producing a print job: (A) his monthly payment on the machine, (B) the cost of skilled wages to run it, (C) the cost of the ink and paper to run through it, (D) the enormous cost of the electricity to run it, (E) the cost of prep and cleanup before and after each job to make it ready, (F) the wages and commissions of the salesforce, and (G) the hundreds of thousands of $$ he'll pay in use tax over the years..............and people complain about the price of printing.

So between all the crushing tax and regulatory burden, that business gets fed up, and picks up and leaves California and moves to Texas.......which is how yours truly ended up here when he did. So, there's a tradeoff. California state only benefits until they chase that business out of the state. Maybe Texas loses some tax revenue per individual citizen or business when people buy from out of state sources, but it gains in overall tax base because of the fecklessness of other states.

I think the problem is that this state, for all of its being more conservative and financially sound than a lot of other states, is still trying to provide too much service to its people, instead of them providing things for themselves. I do get it that there is going to be some kind of cost/benefit tradeoff if we switched our taxation schema, but I also can't help but think that our state gov't (like MOST gov'ts and gov't agencies) feels WAY too free to spend OPM, and gives not NEARLY enough consideration to ways to save The People's money, so that they don't have to be taxed into oblivion.

[bblhd672]

but I also can't help but think that our state gov't (like MOST gov'ts and gov't agencies) feels WAY too free to spend OPM, and gives not NEARLY enough consideration to ways to save The People's money, so that they don't have to be taxed into oblivion.

X 100

[srothstein]

Not that I want to dash anyone's hopes for a better system, but replacing the property tax is not feasible until we do something about all the governmental demands for more money (read that as people demanding things from the government - services or benefits). According to our the comptroller's biennial report, property tax in Texas raises approximately 47% of all money raised by any tax in the state at the state, county, city, school district, or special district level. And when you consider that, remember that the state gets not a single cent from property tax.

I love the idea of doing away with property tax, but I seriously do not see it as possible.

[apostate]

That's a key factor. Government spending has snowballed at the local and State levels as well, not just Federal. There are too many special interest groups suckling at government teats. I don't see Austin doing much to wean them off OPM. Same for DC despite the election results.

I'm in my 40s and can't afford to retire yet, but I also can't afford to keep paying skyrocketing Harris County property taxes, et cetera, if I ever hope to retire. Time to sell.

[Lynyrd]

Not that I want to dash anyone's hopes for a better system, but replacing the property tax is not feasible until we do something about all the governmental demands for more money (read that as people demanding things from the government - services or benefits). According to our the comptroller's biennial report, property tax in Texas raises approximately 47% of all money raised by any tax in the state at the state, county, city, school district, or special district level. And when you consider that, remember that the state gets not a single cent from property tax.

So you are saying that school boards, county commissioners, and city councilmen, and other special tax districts are responsible for spending 47% of all the tax money garnered in Texas. Look around at the state of the art facilities and high salaries of these entities. I know in my county, if you server two full terms as a commissioner, that's just 8 years, you get a pension for life. Where else can you get a pension after 8 years?

The bulk of my property taxes go to the local school district. They keep building new schools, and every time they hold a bond election to issue bonds to borrow the money to build new schools. The voters keep passing them because nobody wants to say no to the children's education. When the bonds mature and the debt is retired, do they roll back that tax rate that was added when that bond election was passed? Absolutely not. The system of raising taxes to cover debt is a downward spiral that has no end. And don't get me started about football stadiums.

[RoyGBiv]

[.how about not building 50-70 million dollar football stadiums for high schools? .

Most places require a bond to be issued for high end stuff like this... and a bond that big typically requires a vote.
We voted down a big stadium expansion bond a few years ago...

It's not always only the school board that votes to spend OPM.

Sometimes folks forget to pay attention to the smaller local ballot initiatives or they forget to go to the polls in May (we've had several bond elections come up during a May vote) since there aren't any big-ticket offices up for election. Smaller turnout is easier to sway. A small group of passionate voters can be quite happy to spend your money for you too.

[ninjabread]

Most places require a bond to be issued for high end stuff like this... and a bond that big typically requires a vote.

However, there's no requirement that the people voting for the bond pay property taxes in the district.

[apostate]

A decent 5 color printing press with a UV coating station can easily cost $2,000,000. That's $165,000 in sales tax, plus another $165,000 in use tax at the end of the year. If the depreciation schedule allows, say a $250,000 depreciation after a year, then the business "gets" to pay another $144,375 for the 2nd year......and so on and so on.

What you describe is an ad valorem tax, not a use tax. Texas also has ad valorem tax on business property, although I suspect the rate is rather less than in California. http://www.statutes.legis.state.tx.us/D ... m/CN.8.htm

[The Annoyed Man]

A decent 5 color printing press with a UV coating station can easily cost $2,000,000. That's $165,000 in sales tax, plus another $165,000 in use tax at the end of the year. If the depreciation schedule allows, say a $250,000 depreciation after a year, then the business "gets" to pay another $144,375 for the 2nd year......and so on and so on.

What you describe is an ad valorem tax, not a use tax. Texas also has ad valorem tax on business property, although I suspect the rate is rather less than in California. http://www.statutes.legis.state.tx.us/D ... m/CN.8.htm

It may well be called that in Texas, but in California, it is actually is called a "use tax". I've seen the documents that the company had to sign off on .....or at least that is what it was called back before April of 2006 when we moved the business to Dallas.

[Ameer]

I think the problem is that this state, for all of its being more conservative and financially sound than a lot of other states, is still trying to provide too much service to its people, instead of them providing things for themselves. I do get it that there is going to be some kind of cost/benefit tradeoff if we switched our taxation schema, but I also can't help but think that our state gov't (like MOST gov'ts and gov't agencies) feels WAY too free to spend OPM, and gives not NEARLY enough consideration to ways to save The People's money, so that they don't have to be taxed into oblivion.

If we can't do that in Texas, what's the chance Trump can do that in Washington? Is America past the tipping point?