Your taxes are higher than they need to be so that large commercial properties can have lower taxes.
As property owners across Texas receive their notices this month of their tax values, appraisers are bracing for another round of appeals by hotels, office buildings and oil refineries making use of a 22-year-old law that has been wildly successful at knocking down their taxable values.
Over the years, appraisers say the law has increasingly shifted the state’s property tax burden onto homeowners, who now face the third-highest property tax rate in the nation.
“The only public policy reason behind it is to enrich commercial land owners at the expense of residential ratepayers,” said Jeff Branick, county judge in Jefferson County, where an appeal filed by owners of a huge industrial facility is creating a multimillion dollar hit on local government tax revenue. “If I had all properties being appraised at true fair market value, I could lower the tax rate.”
Protests and lawsuits related to the tax provision knocked a total of $44 billion off the tax rolls last year in the state’s five biggest counties: Harris, Bexar, Dallas, Tarrant and Travis, records from the Texas Comptroller’s Office show — an amount that equates to nearly $1 billion in tax revenue for local school districts and governments, according to a Hearst Newspapers analysis.
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Jim Popp, a prominent Austin tax attorney who drafted the 1997 law, says the tax provision is working. The change, he said, ensures taxpayers have a way to protest when their property is assigned a value that’s higher than similar ones.
“To me, fair means treating similar taxpayers similarly,” said Popp, with Popp Hutcheson PLLC. If some properties are reduced below their market value, the next year appraisal districts “can come back and correct it so everyone is treated fairly,” he said.
Any property owner can file an equity appeal, but big businesses with the financial means to file lawsuits year after year make the most use of the law.
Property owners in Harris County filed over 5,000 lawsuits in 2017 making an equity argument. Roughly 90 percent came from commercial owners and together wiped more than $5.8 billion from the tax rolls, data from the Harris County Appraisal District shows.
Equity appeals let owners reduce their property’s taxable value by simply showing it’s higher than the median of similar properties — without any regard for what the property would sell for in the open market, a traditional measure of value.
But with so few guidelines in the law, appraisers say owners can find a median by pointing to lesser properties that are not really similar, or that aren’t even located in the same county.
While properties must be “appropriately adjusted” to account for any differences, appraisers say it can be impossible for unique buildings.
“It’s like comparing a 15,000 square-foot residential mansion to a two bed, two bath, two car garage,” said Jeff Law, chief appraiser for the Tarrant Appraisal District. “How do you make adjustments for that? You don’t, because they aren’t comparable.”
Once one property’s taxable value is reduced, the median drops, too. As a result, property owners often try to be the last to protest, said Brent South, Chief Appraiser at Hunt County Appraisal District and a past president of the Texas Association of Appraisal Districts.
“Each time one of their competitors gets an adjustment, it drives that median down,” South said. “It’s a continual spiral effect.”
We’ve covered this before. Fixing this basic problem – which again was a cornerstone of Mike Collier’s campaign for Lt. Governor – should be the first order of business for a Lege that wants to at least slow the rate of property tax growth for homeowners. Doing so would impose a cost on big businesses, though, and the Republicans can’t accept that. So here we are, wasting time again with regressive and unpassable property-tax-for-sales-tax swaps. You can’t fix what’s broken if you’re not honest about what is broken and why it’s broken. As they have done time and time again, the Republicans are demonstrating that this session.
i’m utterly embarrassed with what is being pushed by state republicans.
The proposed tax swap seems to me to be yet another scam. Remember when the proceeds from the state lottery were supposed to go to education? Don’t believe for a minute that Texas’ APP of evil, Abbott, Paxton, & Patrick, will fairly allot sales taxes to education. As the Houston Chronicle’s series, Broken Trust, explains, high fees and poor investment strategies have led to the sinking performance of the Texas Permanent School Fund. Students have been short changed, and so have their parents. Only a change in leadership and the lege will right the situation.
Texas Lottery profits do go to education but the swap scam is a bad idea, as is pushing taxes on commercial property towards residential owners.
The more I hear about it, the more I’m leaning AGAINST the sale tax for property tax hostage swap. They need to find…..a different way to reduce property tax. Of course, the fault is really with all of us local voters, who don’t insist that our school board members stop spending so much money. That’s really the simplest answer.