Sunday, March 13, 2011
From a fatalist perspective, one would assume that the electorate in Texas enjoys being abused by unfair taxation, since it keeps electing the same lackeys for the rich and powerful
Note: Here's something to chew on while our Legislature's in session, making deep cuts in the state budget, putting even more pressure on local taxing entities and hard pressed low and middle income taxpayers to pick up the pieces. Reports are that drastic cuts in public education will be shorting local school districts many millions of dollars. Our county, school districts and cities are assessing the damage. Over the spring and summer, they will be reviewing their next year budgets. There's a high probability that some or all of the new budgets will come with . . . another round of property tax increases. If you think you've had enough, now's a good time to give your elected representatives a piece of your mind.
Send your comments and news tips to email@example.com, to Mr. Moden at firstname.lastname@example.org, to State Rep. Jason Isaac at Jason.Isaac@house.state.tx.us (512- 463-0647), State Sen. Jeff Wentworth at email@example.com (512-463-0125) or click on the "comments" button at the bottom of the story
By Merle Moden
Ad valorem taxes – property taxes – are a major source of funding for Texas school districts, cities and counties. The burden of this tax has been increasing in recent years as a result of steadily increasing appraisals and stagnating incomes.
The ad valorem tax as contemplated in the Texas Constitution is a tax on wealth. Prior to the age of computers, Texans were required to render their property for taxation each year. The tax base, i.e., those things being taxed, as specified and required in Article 8, Sec. 1(b) of the Texas Constitution is composed of: (a) real property - land and buildings (appraisal districts refer to buildings as improvements to land); and, (b) tangible personal property (livestock, wagons, cars, trucks, motorcycles, boats, etc.). Household goods not held or used for the production of income are exempt under Article 8, Sec. 1(d) among other exemptions. Article 8, Sec. 1(c) of the Texas Constitution grants the Legislature the authority to include in the tax base intangible personal property (bank deposits, savings deposits, mutual funds, stocks, bonds, etc.).
Texas Legislatures through the years have whittled down the tax base primarily to real property and personal property for businesses. For individuals, the ad valorem tax is levied primarily on the necessity to live somewhere – not wealth as originally contemplated. Now, we tax a $20,000 lot in a subdivision, but we don’t tax an $80,000 car, a $250,000 boat or a $500,000 stock portfolio.
Why are investments in land and buildings included in the tax base when investments in cars, boats, and stocks are not? The answer is amazingly simple. Wealthy individuals have most of the wealth in this country; expanding the tax base to include these items would subject them to higher taxation; and they choose not be taxed. How is that possible? The answer again is amazingly simple. Texas Legislatures do the bidding of the rich and powerful, as they have done these last many decades.
From a fatalist perspective, one would assume that the electorate in Texas enjoys being abused by unfair taxation, since it keeps electing the same lackeys for the rich and powerful. Inclusion in the tax base of tangible personal property with reasonable exemptions for cars plus the inclusion of intangible personal property with reasonable exemptions for small savings and investment accounts would significantly expand the tax base. Such expansion would lower the tax rates and shift more of the burden for ad valorem taxation up the wealth scale.
The next time that you have a chat with your State Representative or your State Senator ask him/her why we tax $20,000 lots in a subdivision, but not $250,000 boats or $500,000 stock portfolios. After all, they are all just assets. Why discriminate?
Merle L. Moden is a retired economist. He and his wife, Joy, moved to the Wimberley area from Austin in 1997. He served on the Austin Electric Utility Commission for several years, chaired a citizen’s committee on City of Austin Water and Wastewater cost of service, served on the Travis Central Appraisal District Board of Review, and was president of two neighborhood associations in Austin.
Posted by RoundUp Editor at 6:10 PM