Collier: Why eliminating property taxes is a bad idea for Texas
OPINION By Mike Collier – Special to the American-Statesman 1

Posted: 11:26 a.m. Tuesday, May 10, 2016

Like clockwork, the Texas Public Policy Foundation has recommended that Texas eliminate the property tax and replace it with an increased sales tax. They make this recommendation every year, more or less, hoping repetition will turn a bad idea into a good one. Well it won’t. No matter how often the foundation repeats itself, eliminating the property tax and replacing it with a sales tax is a very bad idea for Texas.

If Texas were to eliminate the property tax, almost $50 billion in revenue that pays for school districts, cities, counties, fire districts, hospital districts, utility districts — some 4,000-plus political subdivisions in Texas — would vanish. To fund these operations using a state sales tax, Texas would have to increase the sales tax from today’s 6.25 percent to more than 20 percent — assuming the only thing we change is the tax rate. That would be ruinous to Texas’ retail industry because consumers would buy online or travel to states with lower sales taxes. It would disrupt voter control of school boards, city councils and commissioners courts — and the rest because the state would control the budgets. It would force the state to create a new central bureaucracy to administer the program. And it would shift the overall tax burden onto the backs of those Texans who can least afford it: the working poor and the elderly.

None of this is new. Texans have been watching this dog chase its tail in a circle for years. It’s as though Einstein had the Policy Foundation in mind when he coined the phrase, “insanity is doing the same thing over and over again and expecting different results.”

Fortunately for those of us who value our sanity the, Policy Foundation has given us a slight twist to amuse us this year: Texas can replace the property tax in its entirety with an 11 percent sales tax — not the 20 percent-plus sales tax we are expecting — simply by expanding the tax to cover things we don’t tax already. Look carefully at Talmadge Heflin’s and James Quintero’s recent comments and you’ll see it lurking in this statement: “If the sale of property and services taxed in at least one other state were added to the current [Texas] sales tax base, then the rate would increase … to 11 percent.”

In other words, lawmakers can comb through all 49 states and discover new items to tax. If any state in American taxes something that Texas doesn’t tax already — presto! — Texas officials can slap a sales tax on it while they keep trolling for more. Texas would become, by definition, the state that taxes more purchases than any other state. And at 11 percent, Texas would also have the highest sales tax in America. The Policy Foundation would have us believe this is somehow a good deal.

+Collier: Why eliminating property taxes is a bad idea for Texas photo DEBORAH CANNON
Mike Collier is a CPA and business consultant in Houston.
Well, it’s a rotten deal, and that would be crystal clear if the Policy Foundation had the integrity to publish a list of all the new items they would subject to the sales tax. Home purchases? Doctor’s visits? They must know, because they’ve calculated the impact. The only reason not to publish the list is to conceal from Texans just how rotten their proposal really is.

Talk of eliminating the property tax and replacing it with a sales tax — in all its outrageous permutations — is nonsense. A far better answer for Texas is to fix our broken property tax system and make it fair again for the people who actually live and work here.