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Dec 8, 2016
Texas taxes: No easy answers
Few Texas property owners are fans of the property tax, but many local services, including public schools, depend on the revenue. While a number of alternatives have been suggested, they each come with challenges. Center Research Economist Dr. Charlie Gilliland talked about them on yesterday’s Real Estate Red Zone podcast. Here are some highlights from the discussion.
Business income tax
Texas is ranked 49th on business income tax, ahead of only Delaware. Statistical reports that have been generated by the Texas Taxpayers and Research Association show that the Texas tax burden on businesses is already relatively high compared with the rest of the country.
Texas is ranked 49th on business income tax, ahead of only Delaware. Statistical reports that have been generated by the Texas Taxpayers and Research Association show that the Texas tax burden on businesses is already relatively high compared with the rest of the country.
State sales tax
“We rank 37th nationally,” Gilliland said. “When you look at the Texas Taxpayers and Research Association report that came out in February 2015, businesses paid well more than half of all property taxes and somewhere around 42 percent of all sales taxes. So businesses are picking up much of the tab in both of those areas right now.”
“We rank 37th nationally,” Gilliland said. “When you look at the Texas Taxpayers and Research Association report that came out in February 2015, businesses paid well more than half of all property taxes and somewhere around 42 percent of all sales taxes. So businesses are picking up much of the tab in both of those areas right now.”
“We’re sort of in a noncompetitive stance when it comes to our tax structure relative to business, so piling it on might have a real negative impact,” he said.
Personal income tax
Gilliland said how much a person would benefit from replacing property tax with a personal income tax depends on that person’s situation.
Gilliland said how much a person would benefit from replacing property tax with a personal income tax depends on that person’s situation.
“In any kind of a tax tradeoff situation, there are going to be winners and losers,” he said. “If you’re not a property owner, you’re essentially avoiding paying the property tax. You probably wouldn’t avoid paying an income tax. Meanwhile, property owners who are facing high property tax burdens would see a reduction in their property taxes because an amendment to the Texas constitution requires that two-thirds of any personal income tax has to be used for property tax relief.”
For more on this, listen to this week’s Red Zone podcast. Also, read Gilliland’s latest article, "Texas Tax Conundrum."
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