Statewide Property Tax Proposal - | Lufkin and Nacogdoches, Texas

03/04/05 - East Texas

Statewide Property Tax Proposal

by Chris Cato

Consider what you pay in property taxes, take that number, and cut it down by about a third. What do you think?

"I think it's great if they would reduce the property tax," said one East Texan.

If that happens in Texas the reduction would cost the state about 4.5 billion dollars a year in revenue. To make up for that, the plan now being considered by the legislature, calls for an expansion of the sales tax to include things like bottled water, car washes, and even mechanic services.

If you're a property owner, it probably won't bug you that much. But if you are a renter and don't pay property taxes, it might be a different story.

"I don't think it's fair becasue I rent a home and when I come to buy bottled water, I would be charged just as much as I would if I owned a home," said one renter.

Many renters say it's just plane unfair, but you need to consider where the property taxes go. Property taxes help support schools. So if you rent an apartment, but your children go to school, you're reaping the benefits of somebody's else's property tax payments.

Lawmakers say the new plan would level the field.

An East Texas homeowner we talked with agreed. "I just think if they would equilize it out that it would be alright."

Don't bank on the property tax reduction just yet. It still has to pass through the Texas Legislature. The last person who pushed to trade lower property tax for higher sales tax in Texas was then Governor George Bush, and he failed.

The sales tax would increase the state cigarette tax from 41 cents to $1.41. It would increase motor vehicle sales tax from 6.25% to 7.35%.

For businesses, it would replace the corporate franchise tax, which most businesses don't have to pay, with a broader tax of 1.1% on a business's payroll, up to $80,000 per year per employee. The tax would apply to all forms of businesses, including sole proprietors who have employees.

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