Texas Democrats and progressives need to embrace property tax reform

Photo by The Texas Tribune

For years, Democrats and progressives have rallied in support of investments in education, improvements in healthcare and protection of the environment. They have been tireless champions of civil rights and voting rights. Unfortunately, what they haven’t talked about enough is the increasingly high property taxes surging in Texas.  

Democrats need to talk about tax reform.

Property taxes in Texas are some of the highest in the country, according to the Tax Foundation. Because of our antiquated tax system and exploding property values, middle- and working-class Texans bear the overwhelming burden of taxation. While commercial property owners have successfully used the system to keep their taxes low by fighting appraisal values, homeowners have suffered. 

Residential taxpayers are supposed to be protected by cap on annual increases in property taxes, set at 8 percent per year. But near-automatic value increases have turned into backdoor tax increases — a financial burden on working- and middle-class Texas homeowners. 

These annual increases in property valuation mean annual local property tax bills are increasing faster than inflation and far exceed the average annual salary increases of working and middle class Texans.

Some people forget that when property valuations increase, homeowners’ property insurance bills increase as does their property tax bill, contributing to the rising cost of homeownership. The purchase price of a home is not the only factor in keeping housing affordable. Consideration must also be given to the long-term ability (sustainability) of homeowners to afford annual property tax and homeowners’ insurance payments on top of their mortgage payments.

Before the Great Recession, delinquent property taxes were one of the major causes for the loss of homes and the existence of abandoned buildings in inner-city neighborhoods; so-called upside-down properties — where the taxes and fees owed exceeded the value of the property — resulted in evictions and foreclosures. We literally taxed people out of their homes.

Those abandoned homes became sites for crime and violence, reducing the values of neighboring properties and further destroying inner cities.

While Republicans have talked about property tax reduction, they have not yet done enough to really help fix the problem. GOP state leaders have increasingly shifted the burden of services and taxation downward. While the city has a revenue cap on property taxes, the county doesn’t and those taxes have skyrocketed. Insufficient action by Republicans in Austin and by Harris County government has kept our property taxes far too high. 

To solve this problem we need to embrace fiscally sound and progressive solutions. 

One of the best ways is to expand the homestead exemption. The Legislature should give local governments the authority to expand the property tax exemption for the first $150,000 of residential taxable property. The net effect of this would be a significant tax cut to all homeowners, particularly those in the middle- and working-class. 

Similarly, a reduction of the tax cap to 5 percent would reduce the rate of “automatic” increases in appraisal values. Local governments could still raise more revenues but they would need to actually raise the rate rather than simply take advantage of property value increases. 

Finally, we need fundamental reforms to the appraisal system. There is no arguing that large corporate entities have successfully challenged appraisals and reduced their property values; that shifts tax burdens to homeowners. Appraisal districts are ill-equipped to fight the well-healed corporate lawyers these firms employ. The Texas attorney general’s office should be empowered to intervene in any case involving a corporate entity in opposition to their request to lower their appraisal value. We need to level the playing field to protect homeowners. 

Middle-class Texans need leaders who will advocate for them — not just the special interests. Texas Democrats have to lead the way in fighting for lower property taxes and a fairer tax system.