abolish the property tax, reduce the school tax, raise the sales tax (Austin: fit in, rent)

[schoenfraun]

In the Statesman today:

Capitol stirring again with calls for bigger sales tax (http://www.statesman.com/news/content/region/legislature/stories/06/24/0624salestax.html - broken link)

I think this would be a very interesting discussion...

Personally, I would love to see the property tax reduced or, better, abolished.

I wouldn't mind paying more sales tax, including groceries. I mean, I am a consumer, I should pay taxes on what I consume. I don't know where my home fits into that equation...but I hate how the property taxes go up and up. It hits renters, too, who have to pay inflated rents so their landlords can pay the property taxes.

Frankly, I wouldn't mind seeing some sort of business taxes, too; I mean, the statement that we need to make Texas more business-friendly makes me laugh so hard I choke and gasp. Enron, hello? The deregulated electric utilities, hello?

But we all need a place to live, whether we rent or "own"--the bank owns our homes....

As for public schools: they could be better, overall. But I have no children, and don't want children, so I pay the school taxes and grit my teeth. Those who have children get the benefit of me being a good neighbor and taxpayer.
Moderator cut: OT

What do you think about some tax changes here?

[schoenfraun]

To quote my husband, in his e-mailed reply to me:
Moderator cut: orphaned

"As a flat tax, sales tax disproportionately affects people with lower incomes (a higher percentage of their total income going to taxes). I have no problem funding public education (someone else paid for mine, right?), but I do agree in a way with the "it shouldn't be about where you live" comment. However, MY version of that would suggest that school funding is collected progressively as a function of property value, but then distributed through the schools on a per capita basis, thus having a small redistributive effect. Now, as to how children are taught--critical thinkers vs. compliant workers--that won't be fixed by money.

"But I don't think we can say "I don't have kids, so why should I pay for the education," because it has an effect on our quality of life. The people we encounter who work in stores, doctor's offices, restaurants, you name it--don't we want them to be competent and knowledgeable, if for no other reason than it makes our experience in dealing with them a tiny bit better?

"I suppose the argument holds that we're putting garbage into the system and getting garbage out, so why should we have to pay for that? I guess we need to ensure adequate and equitable funding AND work on significantly improved educational outcomes.

"No matter what, we're still *%#@ed."

Thanks, honey. You always help me out!

Thoughts? I know Texans have thoughts on this!

[Trainwreck20]

This is a HUGE topic and hard to narrow down to specific items. But here are a few for thought:

• Property tax has historically kept housing prices in check. A lot of the affordable housing around Texas is due (in a significant part) to property tax. Property tax keeps investors from speculating too wildly, and people consider property tax when they are buying a house, both effects keep the final cost down.
• Property tax also figures into people's plans when they buy a house, which keeps there from being an explosion of huge houses - not only do you pay for the house, but you keep paying after it is bought/built via taxes. I know that this is a policy/philosphy type issue, but I think there is a long-term benefit to more manageable houses.
• Backing up and taking a look at the big picture, it is unlikely that our overall tax burden will go down. Getting rid of a dollar of property tax will end up in another dollar of taxes somewhere else. So really, it is the distribution of the tax load that is in question. If we are looking for an 'equitable' solution (and assuming that that means the richer pay more dollars, either total or percent), then sales tax is MUCH more regressive than property tax.
• Regarding distribution, I personally think the biggest 'fix' property tax needs is a larger exemption, say 150k (a number out of the blue), which would keep the poor from paying near as much taxes and would place the burden on the large homeowner.

Just random thoughts .

[schoenfraun]

Originally Posted by Trainwreck20

This is a HUGE topic and hard to narrow down to specific items. But here are a few for thought:

• ...If we are looking for an 'equitable' solution (and assuming that that means the richer pay more dollars, either total or percent), then sales tax is MUCH more regressive than property tax.
• Regarding distribution, I personally think the biggest 'fix' property tax needs is a larger exemption, say 150k (a number out of the blue), which would keep the poor from paying near as much taxes and would place the burden on the large homeowner.

Yes, I agree about the problem with the sales tax increase. My husband always sets me straight on issues of flat tax, regressive tax... I quickly jumped at the bait presented in the article without deeply considering the harm a large sales tax increase can do to those with the least...

I certainly wouldn't say no to a larger exemption for the property tax, though! Those who can afford the monster houses, with their energy costs, should definitely pay more than those with smaller homes. Your idea is a good one.

(Until perhaps someone else points out its drawbacks! Perhaps I'm especially gullible today....)

[centralaustinite]

I think that our high property tax saved us from suffering through the worst of the sub-prime mortgage disaster! Home prices in the Austin/Round Rock MSA have stayed between 2 and 3 times average income over the last thirty years (just went through the data yesterday). In part this is because of high property tax. You might be able to get a stated income, no doc 100% mortgage for a half million dollar house, but to keep it, you have to pay 10K in property tax! That forces home prices to stay closer to income. No one will lend you money over 30 years to pay property tax.

The best solution is probably a state-income tax but that is a no-go.

[Biscuits]

Originally Posted by schoenfraun

I certainly wouldn't say no to a larger exemption for the property tax, though! Those who can afford the monster houses, with their energy costs, should definitely pay more than those with smaller homes. Your idea is a good one.

I agree that the current $15k homestead exemption is a joke. However, my property tax appraisal would be ~$600k with no house on the .5 acre lot and my total energy/water use equates to about $100 a month. How do I fit into your plan?

[teatime]

Schoenfraun, I absolutely agree with you and your husband.

People have a choice as to where and how they live -- those who want a McMansion CHOOSE to live big. Those of us with more modest needs and expectations choose that, too. You pay according to what you choose and that's fair.

But all of us need to eat and clothe ourselves. A huge sales tax won't make much of a difference to the well-off but it will have a big impact on the elderly and disabled who are poor, as well as low- and lower middle-income families. Adding more to the already increasing cost of food means those on a tight budget will have to choose cheap starches and fatty meats to keep their bellies from grumbling, which adds to the problem of health care and obesity. It's NOT WORTH IT.

[JamesAbilene]

Teatime, I agree with you 100%. The only real change to be made in our tax system that would decrease the other taxes is to add an income tax. I do not want that.

[texdav]

I thnik that a income tax is fairer. Afterall why should one person that makes 75,000 pay more than another making 75,000 towards education'county and stae services they live in.If the income tax was a flat tax I think that would be fine and alot more peole would pay to support the services they get.Afterall looking at the areas in the stae the best places with teh most services and lowest taxes have a large industrial tax base and then commercial taxes.Property taxes don;'t go very far in building roads;sewer and other services cities provide. Look at your city budget sometime;I was shocked how little homeowner property taxes payed for.

[Trainwreck20]

Although an income tax may seem fairer, have you seen our federal income tax? Jeez! There are so many if's, and's, or but's that it hard to tell if it is fair or not. Historically, the property tax has more 'simply' targeted those that can afford to pay. The exceptions, of course, are generally the retired population, and I think an expansion of the tax-freeze system ought to be considered, as well.