I don't understand funding in the State of Texas (Austin: sales, real estate)

[DougStark]

Can anyone recommend a quick read to help me understand how things get funded in Texas?

I understand the following facts: Texas has no income tax, however, residential property tax in Texas is relatively high. This funding system is not the way most other states get revenue for schools, city services, etc. etc. What about business income tax rates in TX compared to other states?

Has Texas always had this type of funding mechanism, and what are the pros and cons to it? From the point of view of a casual observer, relatively high residential property taxes seem on the surface to discourage home ownership (or maybe they don't? i don't know.)

Also, what income groups benefit the most from the way Texas currently funds state, county and city services?

Again, I'm willing to read a summary that you can recommend that would answer my questions. Finally, are most residents happy with the "no state income tax" but "high property tax" formula?

Thanks!

[North Beach Person]

Originally Posted by DougStark

Can anyone recommend a quick read to help me understand how things get funded in Texas?

I understand the following facts: Texas has no income tax, however, residential property tax in Texas is relatively high. This funding system is not the way most other states get revenue for schools, city services, etc. etc. What about business income tax rates in TX compared to other states?

Has Texas always had this type of funding mechanism, and what are the pros and cons to it? From the point of view of a casual observer, relatively high residential property taxes seem on the surface to discourage home ownership (or maybe they don't? i don't know.)

Also, what income groups benefit the most from the way Texas currently funds state, county and city services?

Again, I'm willing to read a summary that you can recommend that would answer my questions. Finally, are most residents happy with the "no state income tax" but "high property tax" formula?

Thanks!

I don't know what states you mean but almost all of them have at least some of the funding for schools and other governmental services coming from property taxes.

http://www.ncsl.org/research/educati...public-ed.aspx

Typically states with no income tax have relatively high property taxes. The money to run the government/provide services has to come from somewhere.

[DougStark]

^^^^^ North Beach, OF COURSE I know that most states fund schools and other services from property taxes. What I don't understand about Texas is, why did the state decide to choose relatively high property taxes and eliminate any state income tax?

How is this strategy of revenue collection (no state income tax & higher than normal property tax) superior to what most other states do? (impose a state income tax AND a moderate residential property tax.)

I hope SOMEONE understands my question

[North Beach Person]

Originally Posted by DougStark

^^^^^ North Beach, OF COURSE I know that most states fund schools and other services from property taxes. What I don't understand about Texas is, why did the state decide to choose relatively high property taxes and eliminate any state income tax?

How is this strategy of revenue collection (no state income tax & higher than normal property tax) superior to what most other states do? (impose a state income tax AND a moderate residential property tax.)

I hope SOMEONE understands my question

Oh.
I believe Florida is the same, no state income tax but relatively high property taxes. There are several other states which don't.

I would imagine it has a lot to do with political culture in a lot of cases. Nevada has casino money. Pennsylvania didn't adopt an income tax until the 1970s.

Maryland was early, 1937.

[TexasRedneck]

Mostly because Texas lawmakers chose to have ONE method of drafting money out of our pockets vs several. It tends to keep us focused on how much is being taken, rather than adding on an extra fee to everything (i.e., look at your vehicle registration fees, or utility bills).

[Trainwreck20]

Despite the pros and cons of property vs income tax, I kind of like it because a) it is much simpler with few exceptions/loopholes (compared to income tax) and b) you can't 'hide' your property in a shell corp or an off-shore account.

Don' forget sales taxes, ofc.

[RoamingTX]

In theory. It’s simple:

Don’t spend much, you don’t need much.

In practice, well..... gets a little convoluted.

[centralaustinite]

One benefit of an income tax is that when your income declines, so do your taxes. You can suddenly lose your job but the full property tax will be due every year! (I don't escrow and pay my property taxes in full once a year).

I do think that Texas does property taxes right in that they assess every year, and you pay taxes (minus various exemptions) on the value of the asset you hold every year. No idiotic Prop 13 inequalities.

It makes living in an area with rapidly increasingly real estate values challenging. My house has more than doubled in value in 15 years and the tax bill has grown accordingly. We would like to retire in this house but likely won't be able to afford the taxes in another 15 years.

[TheOverdog]

Mostly because Texas lawmakers chose to have ONE method of drafting money out of our pockets vs several.

Exactly. It's honestly better because of that in my opinion, and because you can choose where you live more than you can massage your income.

My house has more than doubled in value in 15 years and the tax bill has grown accordingly.

That's a problem with the financial mgmt of the city of Austin (lots of sprawl and low-value property in the city vs required expenses) or wherever you live more than it is a function of increasing property values. My house has doubled in 5 years and my property tax is not that much more.

[murk mags]

Property tax doesn't seem to be terribly high in Texas from what I've seen in my home state of CT. Anybody willing to divulge their property tax amount? Here, we have taxes on everything, and it's insane... Property, sales, income, vehicle, and so forth.