Abolishing Property Tax?

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Abolishing Property Tax?

Postby AEA » Tue Nov 27, 2012 1:53 am

Was not going to post this, since not firearm related, but saw where the Death Penalty subject is being discussed so thought this might be OK.

The idea being that regardless of what side you are on with this subject, it would be nice if Charles would add any bills concerning this to the list to watch.

My thoughts........no property tax = more money to buy guns and ammo! :thumbs2:
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Re: Abolishing Property Tax?

Postby Scott in Houston » Tue Nov 27, 2012 6:54 am

What would they replace the revenue with? An income tax?
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Re: Abolishing Property Tax?

Postby Choctaw » Tue Nov 27, 2012 7:29 am

Scott in Houston wrote:What would they replace the revenue with? An income tax?


A reduction in spending, of course. You don't think we have some fat to cut?
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Re: Abolishing Property Tax?

Postby tomneal » Tue Nov 27, 2012 8:19 am

The plan is to replace Property Tax revenue with an increase in Sales Tax.
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Re: Abolishing Property Tax?

Postby RoyGBiv » Tue Nov 27, 2012 9:22 am

tomneal wrote:The plan is to replace Property Tax revenue with an increase in Sales Tax.

Hmmmmm...
http://www.texaspolicy.com/center/fisca ... and-income

Anyone have a more current link? Maybe a link to a bill? Any specific proposals on the table?
I am not a lawyer. This is NOT legal advice.!
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Re: Abolishing Property Tax?

Postby Charles L. Cotton » Tue Nov 27, 2012 10:46 am

I would LOVE to see property taxes reduced or eliminated. I would HATE to see it replaced by an income tax and that is 100% certain to happen. It won't happen immediately if property taxes are cut or eliminated, but those reductions will be used at some point in the future to argue that we need an income tax to make up for lost revenue.

I don't believe one bit of Dr. Laffer's "report" but even he admits the new state sales tax rate would be between 11% and 15.7%. Remember also that the state sales tax rate is 6.25% and local governments can and usually do add 2%. I see no mention of reducing or eliminating the local government "add-on" so Dr. Laffer is talking about an increase between in the state portion alone of somewhere between 4.75% and 9.45%. That's a percentage change between 176% to 251% and we'll still be paying the 2% local sales tax. That level of sales tax will make Texas products far less attractive for out-of-state buyers, so even if lower property taxes would attract businesses to Texas, the poorer market share would discourage moving to Texas. Plus, companies are going to have to pay the same very high sales tax and this discourages moving to Texas. (Companies will have to pass along these costs to consumers, thus further raising the price of goods produced in Texas.) Companies are often granted property tax reduction/relief as an inducement to move to Texas or open facilities here. If you really want to attract more business, repeal the margin tax. It's nothing more than a disguised income tax for businesses.

Do a quick and dirty test to see if Dr. Laffer's numbers pass the smell test. For me they don't. If I divide my current property tax burden by the current state property tax rate of 6.25%, I get a figure that represents the amount of taxable spending I would have to do each year just to keep state revenue at current levels. At the current rate, I don't spend enough for the State to even break even, nor do I even with a 176% tax increase to 11%. I might (emphasis on the "might") spend that much if we raised sales taxes by 251% to the 15.7% rate proposed by Dr. Laffer, but a large percentage of the population can't or won't. This means lower overall revenue and the perceived need to generate revenue from other sources to maintain current spending levels. If you eliminate state property taxes, then the only other revenue source will be a state income tax because you can't raise fees enough to fill the gap. If state property taxes had not been eliminated but merely reduced (even dramatically), then the shortfall will be replaced by increasing state property taxes. In the end, we will have gone from relatively high property taxes, through a period of low or no state property taxes but grossly high state sales taxes, to a system with grossly high sales taxes and either a state income tax or a return to high property taxes.

The other problem with sales tax revenue is that it relies heavily upon discretionary spending by a large segment of the population. People will do everything they can to make significant purchases in other states, or over the Internet. (Yes, Texas claims a right to sales taxes on Internet purchases, but many companies don't care and don't charge tax.) So what happens when Dr. Laffer's 176% to 251% results in lower revenues, potentially much lower? Politicians will have an excuse to push for what many have wanted for years, but were afraid to bring up -- state income tax. We have recently discussed the changing demographics in Texas and the resistance to a state income tax will wane as time passes. It's easy to snooker lower income voters by initially setting a "0 tax floor" at an income level that will mean most of them will not pay any state income tax, leaving it to be paid only by the people who are perceived to be "rich." Of course, that won't work either and the relatively low initial state income tax rate will increase just as the federal income tax rate has risen.

If we have to pay $X in taxes, it does us no good to change the name on the tax if we still have to pay $X. In all likelihood, we'd be paying $X+ in total taxes under various titles, making so-called tax relief a lie. This isn't rocket science; if the government spends $100 it has to collect $100 and the title on the tax bill is irrelevant.

I want a lower tax burden overall. The only way to do this is to reduce state spending and that means making some tough decisions on cutting services. I don't know the exact percentage of state spending that goes to "education" but it's huge. While cutting silly, unproductive expenses is prudent, it doesn't amount to significantly reduced spending. Infrastructure expenditures must continue and it should be at an increasing rate as roads, bridges, etc. age. So like it or not, that leaves education. Like I said, these are tough decisions, but there really is no tooth fairy.

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Re: Abolishing Property Tax?

Postby Keith B » Tue Nov 27, 2012 11:06 am

You are gonna pay somewhere. I have lived in mutiple states and have payed lower property taxes, but the offset was a state income tax. The better solution in my opinion is to try and lower proerty taxes by offsetting it with resturant, hotel and entertainment type of sales taxes. Raising the tax on 'luxury' items vs. getting the monies from those areas that are nessecities would be the best solution to me.
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Re: Abolishing Property Tax?

Postby tomneal » Tue Nov 27, 2012 12:03 pm

Math Example:

$1000 in Property Tax = $16,000 in purchases with a 6.25% sales tax

but we already pay 6.25% state sales tax

so...

Would the sales tax rate need to double?


Real world question:

If the sales tax doubled, would you buy less or simple buy more from out of state?


Comment:

I don't like the fact that property taxes are like renting my own house from the state.
I despise the idea of a Texas State Income Tax.
The state of Texas needs some level of revenue to perform valid state functions.
I don't have a solution to this problem.
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Re: Abolishing Property Tax?

Postby anygunanywhere » Tue Nov 27, 2012 1:05 pm

tomneal wrote:Math Example:

$1000 in Property Tax = $16,000 in purchases with a 6.25% sales tax

but we already pay 6.25% state sales tax

so...

Would the sales tax rate need to double?


Real world question:

If the sales tax doubled, would you buy less or simple buy more from out of state?


Comment:

I don't like the fact that property taxes are like renting my own house from the state.
I despise the idea of a Texas State Income Tax.
The state of Texas needs some level of revenue to perform valid state functions.
I don't have a solution to this problem.


Whatever "solution" ever comes around for taxes, EVERYONE, regardless of their income, MUST pay their share.

Property taxes are not the fairest of taxes.
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Re: Abolishing Property Tax?

Postby TexasCajun » Tue Nov 27, 2012 1:59 pm

if the government spends $100 it has to collect $100

If you consider bureaucratic inefficiency, even in the great state of Texas, the gov't would have to collect about $140 in order to spend $100.

But seriously, eliminating the property tax would probably be the worst solution to the old revenue/expenditure equation. You can protest your property valuation thereby lowering your property tax bills. But you can't negotiate a lower income tax or sales tax. If our trusted [sic] servants can't or won't make some tough budgeting choices, then they'll have to reach into the federal purse or our pockets.
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Re: Abolishing Property Tax?

Postby Scott in Houston » Tue Nov 27, 2012 2:17 pm

Choctaw wrote:
Scott in Houston wrote:What would they replace the revenue with? An income tax?


A reduction in spending, of course. You don't think we have some fat to cut?


You are making the assumption that politicians have a clue. They don't... Spending cuts would never cover it like they should, or they'd never happen, and we would end up like California.
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Re: Abolishing Property Tax?

Postby Heartland Patriot » Tue Nov 27, 2012 3:38 pm

Indeed, there aught to be a reduction in spending by our state, if the state doesn't have enough funds to cover what they are spending. Why is it that regular folks, working jobs, have to BUDGET based on what they earn and if they aren't going to make as much money as they were, they have to SPEND LESS MONEY...but the government, any government, just spends whatever they want to and the regular folks, working jobs, have to pony up more and more money? You know it ain't right. And with the amount of money I see that my kid's school wastes on what I consider to be frivolous, there are most certainly things in education in our state that can be cut. The whole high school being bussed, at taxpayer expense, to Texas Motor Speedway for a raffle drawing for a new car? What was the fuel bill on that? And that is only ONE example. And don't get me started on the vast array of principals, vice principals, assistant vice principals, etc, etc...the rallying cry of those who want YOUR money is always "think of the children". :mad5
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Re: Abolishing Property Tax?

Postby urnoodle » Tue Nov 27, 2012 4:14 pm

I hope there is a solution to the high property taxes. I don't have children but every year the biggest part of my property taxes goes to the ISD. I've often wondered what the impacts would be if we reformed education. Educate adults to educate their children at home. Use the valuable resource we have in the internet to provide a quality education to children at home. Universities are already making this move. We'd save billions of dollars per year by reducing the cost of buildings, equipment, maintenance and yes teachers salaries. I'm not impressed with the teachers I've seen for my friends children. Lets provide higher salaries to those teachers that love to teach and do it well. Let teachers use the internet as the vehicle to provide a quality education to all children and not just to those that live in a higher income demographic.
I realize parents have to work to provide for the family but I think there are alternative solutions to resolve some of those issues. Schools were meant to educate and not to be a daycare service ( which IMHO seems more prevalent) for parents that work.

So if the bulk of state spending is in education which is demanding the high property taxes, then I don't think the state is looking at alternatives.

Stepping off my soapbox......
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Re: Abolishing Property Tax?

Postby Abraham » Tue Nov 27, 2012 4:52 pm

What's that other 2% I pay in sales tax go for...?
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Re: Abolishing Property Tax?

Postby Charles L. Cotton » Tue Nov 27, 2012 4:54 pm

Abraham wrote:What's that other 2% I pay in sales tax go for...?


That's the local government "add-on" and it goes to the city.

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