The $18 billion compromise between the Texas House and Senate — which includes more than $5 billion approved for relief in 2021 — would give increased tax relief for the state’s 5.7 million homeowners and create a tax-credit pilot program for non-homesteaded properties. It would also cut taxes to small businesses and send billions of dollars to school districts so they can cut their tax rates across the board, according to details made public by state leaders Monday.
The proposal must clear both chambers before it heads to Gov. Greg Abbott’s desk. Abbott said he looks forward to approving it.
According to Phelan’s office, the legislation, expected to be passed this week, includes more than $12 billion to reduce the school property tax rate for homeowners and business properties; an increase to the homestead exemption from $40,000 to $100,000; and savings on the franchise tax for small businesses. It would also include a so-called “circuit breaker” program for residential and commercial properties valued at $5 million and under. The program would be piloted for three years.
“Reducing property taxes, providing relief to small-business owners, and reforming our appraisal system will ensure economic growth and prosperity, and this agreement is a significant victory for all Texans,” Phelan said in a statement.
After a monthslong standoff among Texas’ top Republicans, state GOP lawmakers finally struck a deal Monday on how to cut Texans’ property taxes.The new property tax relief bill, the franchise tax relief bill and the constitutional amendment required to enact the cuts will be filed later Monday, Phelan’s office said in a statement.
The deal marks the end of a stalemate among the state’s top Republicans that lasted nearly seven months as they butted heads over how to dole out $12.3 billion in new tax breaks budgeted by lawmakers earlier this year.
I haven’t paid much attention to Special Session-Palooza this year because life is short and I figured sooner or later the Republicans would realize this wasn’t a good look for them and they would rather be anywhere but in Austin for the summer. This agreement has two knock-on effects, in that it at least temporarily frees Sen. Roland Gutierrez to hit the campaign trail and raise a few bucks, and also sets up Abbott to call another session to try once again to jam vouchers down everyone’s throat. The expectation is that there will be a pause in between Special Session II (The Wrath of Khan) and Special Session III (Beyond Thunderdome), mostly because they didn’t want to debate vouchers while school was out and teachers had the free time to get to Austin and harangue them about it. Also, too, they might want to do something about this before that happens.
Anyway. I found this next bit to be hilarious.
An earlier proposal sought by the House to put a tighter cap on how much taxable property values can rise each year — also known as an appraisal cap — appears to have been left out of the final deal. Instead, the new plan includes a pilot tax-savings program known as a “circuit breaker,” which calculates how much a person should pay in property taxes based on their income levels.
Those tax-credit programs provide targeted relief to certain residents, like seniors, when their tax bills take up too much of their income. Details of the plan that would be included in the Texas Legislature’s new proposal were not immediately released Monday morning.
Circuit breaker programs “are not as simple [as appraisal caps] but they will deliver benefits to the [low-income] people you are concerned about, without also throwing tons of money at your wealthiest homeowners,” Richard Auxier, senior policy associate at the Urban-Brookings Tax Policy Center, told The Texas Tribune earlier this year.
Texas doesn’t have an income tax or a statewide property tax, which would help verify a person’s income and make such a program easier to administer. An idea to implement a circuit breaker program died in the 1990s because it came with enormous administrative costs in the absence of an income tax, according to Every Texan, a progressive think tank in Austin.
Other states have a version of this type of program. Half of those are part of the income tax or property tax systems, while others are treated as rebates, according to an analysis by Every Texan. A successful program in Texas would likely need to be a rebate-style program, the analysis says.
There’s more, so read the rest. The lengths to which our government will go, and the contortions they will engage in, to avoid the reality that an income tax would be simpler, fairer, and more efficient than the janky loophole-ridden special-interest-fest that is the current system never ceases to amaze me. The Chron has more.