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Yes, they really are now pushing a sales tax for property tax swap

Some bad ideas never die.

Texas’ top three political leaders — Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen — threw their support Wednesday behind a proposal to increase the sales tax by one percentage point in order to lower property taxes across the state.

But that’s only if lawmakers agree to limit future local property tax increases.

The proposal would raise the state’s sales tax from 6.25% to 7.25%, generating billions of additional dollars annually for property tax relief, if voters approve a constitutional amendment. But the idea will be a hard sell to Democrats, since the sales tax is considered regressive, meaning lower-income Texans end up paying a larger percentage of their paychecks than higher-income Texans.

“Today we are introducing a sales tax proposal to buy down property tax rates for all Texas homeowners and businesses, once Senate Bill 2 or House Bill 2 is agreed to and passed by both Chambers. If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term,” said a joint statement from the three Republicans.

Neither chamber has passed HB 2 or SB 2, which would require voter approval of property tax increases over 2.5%.

The House Ways and Means Committee was scheduled to take public testimony on the House’s sales tax swap proposal this week but delayed hearing the bills. Rep. Dan Huberty, R-Houston, who authored House Joint Resolution 3 and House Bill 4621, is considering changing the legislation to use a fraction of the additional money generated by the sales tax for public schools — in order to get more Democrats on board.

The bills are intended to provide another revenue source to help significantly cut down local school property taxes, which make up more than half of the local property taxes levied in Texas.

If the Legislature approves the resolution, the constitutional amendment would go to voters to approve in November, and if voters sign on the tax rate change would apply in January 2020.

See here for the background and my opinion about this lousy idea. Given that a constitutional amendment is needed for this, it will be easy enough to prevent it from happening. The progressive case against swapping out property taxes, which will disproportionately benefit commercial real estate and wealthy homeowners, for regressive sales taxes, is clear cut, and likely to hold a lot of sway with the current Democratic caucus. There’s also polling evidence to suggest that the public doesn’t care for a sales tax increase. I’m a little skeptical of that, since the question was not asked in conjunction with a potential cut in property taxes, but that’s an argument for the Republicans to make, and given the baked in doubt about anything actually reducing property taxes (for good reason!), I’d take that bet. HB2 is up for debate today, so we’ll see how this goes. The Chron and Texas Monthly have more.

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22 Comments

  1. Manny says:

    a 16% increase on the sale tax, the Republican way to stick it to the working men and women while allowing the filthy rich to pay percentage wise much less in taxes.

  2. Bill Daniels says:

    Hmm, a 1% increase in sales tax. Let’s assume this is on things currently subject to state sales tax already, so your mortgage, food, medicine, your barber, your accountant, etc. aren’t going to have the new 1% tax levied. So let’s take someone who spends $ 20,000 on taxable goods a year. That person spends an extra $ 200 on sales tax.

    Here’s the thing: after mortgage payments, car payments, utility bills, food, medicine, doctor visits, etc., I doubt that many average Joe homeowners spend more than $ 20K a year on things that have Texas state sales tax levied on them. Lots of hand to mouth folks aren’t going to even spend $ 10,000 on taxable goods.

    I want to know what the percentage decrease in property tax will be if we agree to this, and I want to know that that decrease is permanent, in other words, if the decrease isn’t permanent, then the sales tax increase shouldn’t be either.

    We need to know the numbers, but this idea seems like it would be good for seniors and others on a fixed income, who are desperately trying to NOT lose their home to the tax man. You can always choose not to buy something and pay sales tax, but you can’t choose to not pay property tax.

    I can’t give an opinion until I see the numbers. As they say, “the Devil’s in the details.”

  3. Manny says:

    Must lack of reading comprehension or bad math teachers, or maybe not too smart persons, but Trump lovers have trouble understanding.

    The sales tax presently is 6.25 cents per dollar.

    The Republicans are proposing a one cent increase to 7.25 cents per dollar.

    Simple 5th grade level math would show that the increase is 16%, the equation is 7.25/6.25.

    Bill your 1% is not only wrong, it is a one cent increase.

    But the stupidity of Trump lovers is even worse than suggested above, because they are getting a 16% increase in sales tax, but getting no cuts on their property tax. Simply put for the simple minded you will pay at least the same amount of property tax next year, assuming the value is the same and market and appraised are equal.

  4. SocraticGadfly says:

    You forgot to mention Drew Springer as one of the chief pushers of this.

  5. Jules says:

    Agree with Manny.

  6. Bill Daniels says:

    Manny,

    You’re just pathetic at this point. Hell, I even did the math for you to explain what a 1% tax increase means. I agree with the percentage increase number you posted, and I posted an example of the practical implication of that. Your TDS, much like syphilis, has rotted your brain.

  7. C.L. says:

    They’re proposing the sales tax increase from 6.25% to 7.25%, an increase of one percentage point. An increase from 6.25% to 7.25% is an overall increase of 16%. Manny, Bill was correct in how he referenced it, and yes, Manny, you were correct in your 5th grade math calculation. Props.

    Why so much hate, Manny ? Why does everything have to boil down to political ideologies with you ? The hate you espouse towards others with a different viewpoint is no different than the hate you believe Trumpsters have for the downtrodden or brown-skinned or Dems en masse.

    Doesn’t matter if you’re making $200K/yr and buying goods worth $30K/yr, or you’re making $50K/yr and buying goods worth $5K/yr… the taxes you’d be paying on said goods increased at the same rate. About the only way this would not be all that beneficial for you is if you’re not paying any property taxes to begin with…

  8. Jules says:

    CL, do you know how much property taxes would decline? And how much more than the sales tax increase it would be for anyone?

    And why we shouldn’t care that this would disproportionately affect the poor, the elderly and the war widows?

  9. Manny says:

    C.L. you and Bill are frustrating, it not hate it is frustration that so much ignorance is posting comments as if they were facts.

    “They’re proposing the sales tax increase from 6.25% to 7.25%, an increase of one percentage point.” In what math world do you make that one percent, and example would be good to prove how you get one percent.

    The Texas Public Policy Foundation, used that one percent, also. One cent is one percent of one hundred (A dollar) but that is not how you determine percentage increase for the sales tax increase.

    But you Trump lovers, love to troll and post “Facts as you see them” not as they are.

  10. C.L. says:

    Oh Manny…. yes, an increase of one percentage point, from 6.25% to 7.25%, is an overall increase of 16% (based on that 5th grade math calculation you referenced earlier). Both facts are true. Feel free to contact your 5th grade math teacher for clarification/confirmation on that.

    And for God’s sake, what makes you think I’m a Trump lover ?

    Jules, I made no comment re: not caring that non-property owners wouldn’t benefit from the PROPOSED plan.

  11. Manny says:

    C.L. it is a one cent increase, do you have problems with reading comprehension?

    I would do the math of a 1% increase for you, but I would have better luck with a 6th grader.

    Why do I think you are a Trump lover, won’t vote for Adrian because of his hair.

    Would not vote Hidalgo, just because.

    You often defend the policies of Trump, that in my opinion makes you a Trump lover.

  12. Jules says:

    https://www.texastribune.org/2019/04/08/texas-property-taxes-homeowners/?utm_campaign=trib-social&utm_content=1554924406&utm_medium=social&utm_source=facebook&fbclid=IwAR29PTjIpqE8DLVPMhfYRxUzv_TQGy8Pk7GUh-w75Ytb62ERI29RbkHXh6Q

    A link showing decreases in property taxes for Dallas and Round Rock. Doesn’t seem to do much to offset a sales tax increase. Seems like overall, Texans would pay more.

  13. C.L. says:

    Manny, a percentage point is a unit of one percent… an increase of one percentage POINT, like, say, 6.25% to 7.25%, is ALSO an overall increase of 16% (1/6.25 = a 16% overall increase (from 6.25% to 7.25%)).

    Please contact whatever institute of higher learning you attended (if any) and let them know you’re still confused with 5th-6th grade math and/or Economics or Statistics. Perhaps they’ll give you a pass at this point as X amount of time has passed since you graduated (if you, in fact, did).

    I’m a Trump lover because I’m not a fan of Adrian Garcia’s haircut ?

  14. C.L. says:

    Manny, here’s a Wikipedia reference for you:

    “A percentage point or percent point is the unit for the arithmetic difference of two percentages. For example, moving up from 40% to 44% is a 4 percentage point increase, but is a 10 percent increase in what is being measured.”

    Consider yourself schooled.

  15. Jules says:

    I think everyone gets the math. Maybe someone could post a Wikipedia link to belaboring the point.

  16. Joel says:

    “Seems like overall, Texans would pay more.” – Jules

    We WANT Texans to pay more, overall.

    We just don’t want it to come equally from every Texan.

  17. Manny says:

    C.L. – Oklahoma State University and University of Houston.

    Your example is based on 100%, so your example for that is correct, it not correct for the increase in taxes.

    Like I said, it would be easier explaining to a 6th grader.

    Using your example then if property taxes go up from $2,000 to $2,012 it went up 12%.

  18. C.L. says:

    Manny, I give up trying to explain to you simple math and math terms.

    Your grammar, though, is still up for grabs.

  19. Manny says:

    C.L. there is no measurement of percentage it is money that is going up. You copied Wiki perfectly but failed to comprehend, “difference of two percentages”. You should read the entire section of what they stated, although it way beyond your level of understanding.

    They use the following example;

    “Consider the following hypothetical example: In 1980, 50 percent of the population smoked, and in 1990 only 40 percent smoked. One can thus say that from 1980 to 1990, the prevalence of smoking decreased by 10 percentage points although smoking did not decrease by 10 percent (it decreased by 20 percent) – percentages indicate ratios, not differences.”

    C.L. why is really 20% can you explain that?

    assume population of 1000, then 50% would be 500
    assume population of 1000 then 40% would be 400

    smoking decrease by 100 which is 20% of 500

    That assumes that population stayed static which it probably would not, but they kept it static for easier comprehension.

  20. Jules says:

    So what they are trying to do is:

    Increase sales tax more than they cut property taxes thereby moving some tax dollars out of local entities and into state hands all the while making people think they are getting a tax cut but most would pay the same or more with the net result being more taxes paid overall and as a huge bonus shafting the poor, the elderly, and the war widows?

  21. Manny says:

    That is exactly what the Republicans are trying to do, Jules. But they have to invent a lie, like a percentage point increase to fool people into thinking that it is a very small increase while it costs hundreds of dollars to those least able to afford to have a tax increase. The elderly who rely primarily on their social security.

  22. Bill Daniels says:

    The argument that the poor and the elderly would pay more depends on the actual numbers, and whether they are homeowners or not. In other words, without the specifics, we won’t know who wins and who loses. Plenty of poor and elderly ARE homeowners.

    Now, Jules mentions war widows, and since they already pay no property tax, they are definitely going to pay more tax, and be negatively effected by this. No matter what the numbers are, war widows are going to lose. Having said that, I don’t agree with a lifetime moratorium on property taxes for war widows. I would have been good with a set time period, say 5 years, ok, maybe even 10, but not a lifetime. It creates a perverse incentive for them to never remarry, so they don’t lose the tax exemption, for starters.