Texas Republicans continue to push for abolishing property taxes entirely in the state, a measure that would cost the state more than $81 billion a year.
The idea of eliminating the property tax is a pipe dream for some Republicans, but the proposal has been met with skepticism, and Lt. Gov. Dan Patrick directed lawmakers earlier this year to tally up the costs.
The Texas Senate Finance Committee on Wednesday found that the state will need to come up with $81.5 billion a year to make up for lost property tax revenue, including $39.5 billion in school district property taxes and $42 billion from cities, counties and special districts.
The $81.5 billion needed to eliminate the property tax would have to be made up through other taxes or cut from the state budget. According to the Austin American-Statesman, the sales tax would have to be raised to 22% to make up for the loss, a cut to the state budget that would mean giving up more than half of Texas’ current biennium budget of $144 billion.
According to the Texas Tribune, sales tax increases could disproportionately affect low-income households because they take up a higher share of their income than higher-income households.
“Imposing these dramatically higher tax rates on low- and middle-income Texas families will deal a severe blow to household finances and the state’s overall economy,” Shannon Halbrook, a fiscal analyst with the left-leaning Every Texan, said Wednesday.
The proposal to eliminate the property tax could also have a negative impact on the state’s public education system, which relies heavily on property taxes to fund teacher salaries and new facilities. On Wednesday, Texas Education Agency Director Mike Morath told lawmakers that recent tax reforms have significantly reduced the amount of money school districts send to the state.
“In the most recent school year, we would have put $10 billion back into the school finance system,” Morath said, “but because of these three tax policies, we only put $2.7 billion back into the system.”
Nevertheless, Gov. Greg Abbott and Patrick have been pushing for more property tax relief. For example, Gov. Abbott said earlier this year that the Legislature should continue to crack down on property taxes “until we eliminate the school property tax rate in Texas.”
