Wednesday, December 19, 2007

Fair Tax in Texas - Update 2

I sent two e-mails to State Rep. Larry Taylor's office regarding Rep. Phil King's sales tax proposal and received replies to both of them from Cari Chistman-Ott, his Chief of Staff. The first e-mail was voicing my support for the sales tax, and the second included my criticism of Dick Levine's position paper from CPPP.

Her e-mails are below:

Thank you for contacting Rep. Taylor regarding Rep. Phil King's consumption tax proposal. Rep. Taylor works closely with Rep. King on the Texas Conservative Coalition's Property Tax Task Force, in which they are both members. He believes Rep. King's proposal is a good starting point and looks forward to continue working with him on this proposal and others to relieve taxpayers from skyrocketing property taxes.

I have attached a copy of the TCC's statement on property tax reform for your review. Rep. Taylor will continue working with the task force throughout the interim to find a solution that will pass during the next legislative session in 2009.

Text of the attachment is here:

Texas Conservative Coalition: End the School Property Tax
State Representatives Wayne Christian (President),
Linda Harper-Brown (Vice-President),
and Ken Paxton (Secretary/Treasurer)
Contact: Brent Connett Phone: 512-474-1798

The property tax is the single worst tax ever devised.

Despite billions of dollars appropriated by the Legislature to cut Maintenance & Operations (M&O) tax rates, homeowners and businesses are facing rising tax bills due to local increases in appraisals, rates, and debt. It is apparent that the only way to provide relief from the M&O property tax is to eliminate it altogether.

Members of the Texas Conservative Coalition have shared a stark realization with Texans around the state at TCC town hall meetings: No one ever truly owns their home. Even after a mortgage is paid in full, the government continues to collect ‘rent’ in the form of the property tax. Should a homeowner fail to pay their property tax bill, the government can ‘evict’ the homeowner and seize the property.

This system of taxation is unjust and unacceptable.

Home ownership is the ultimate expression of property rights, but as long as property is taxed in perpetuity, home ownership is a dream that can never be fully realized. We have posed the question to our constituents and they agree with the fundamental idea of eliminating the M&O property tax as a means to restore their property rights.

If we succeed in putting together a plan to eliminate the M&O property tax, more low-income Texans will be able to attain the American dream of homeownership, middle-income Texans will be free of a constantly growing financial drain, and senior citizens on fixed incomes will be free to live in their homes. Furthermore, we aim to bolster Texas’ entrepreneurial spirit by eliminating a major and never-ending cost that all businesses face.

The state can meet its obligation to fund public schools without burdening home and business owners with unjust and constantly increasing property taxes.

P.O. Box 2659, Austin TX, 78768 􀃕 512-474-1798 􀃕
The second e-mail indicates that she forwarded my criticism below to Rep. Taylor.
Maybe he will read it, maybe not, but at least I got a response.
Mr. Shelley, Thank you. I will pass this along to Rep. Taylor…clc


Alex G. said...

It is great you got a response, but how realistic is the proposal to end property taxes?

How long would it take for the lack of property taxes to "trickle" down to the renter? I believe it would take at least a year, probably more. I think it would time some time for the market to adjust to such a massive change.

I also think you would see massive opposition from areas close to the boarder. If I am going to make a big purchase, why wouldn't I drive over to Louisiana? Nor do I believe Landlord would lower rents comparable to the reduction in tax.

While I agree with the merits of the proposal, I also think the "fairtax" idea is too great a leap. Economists love the idea, but reality is always a blurry shadow of the theory.

Brian Shelley said...

"Nor do I believe Landlord would lower rents comparable to the reduction in tax"

Let me redirect you to a recent post - If You Only Knew the Power of the Free Market.

In a competitive market, the landlord would have no choice. As soon as the landlord next door lowered his rates he would have to lower his or face vacant apartments. The landlord is virtually powerless in the face of market forces. Sure it may take a while, but it is inevitable.

"If I am going to make a big purchase, why wouldn't I drive over to Louisiana?"

You forget one secondary effect. While sales tax rates would climb, the lower property tax would allow the retailer to drop his prices to stay more competitive with Louisiana rivals and still maintain profit margins. It may not be a one for one tradeoff, but I would need data to say for sure.