For many years, property taxes have been a source of conversation and consternation in Texas. Even though overall, Texas ranks among the lowest taxing states of the union, property tax remains a sore spot with almost all citizens. In Texas, property taxes have risen from near the lowest in the United States in the mid-1950s to among the top three or four in the U.S. today.
Property tax is the primary way Texans support public education. In all, property taxes levied in the various districts and counties throughout the state amount to a little over $60 billion. A few frustrated members of the Legislature have suggested we abolish the property tax to support education and replace it with an increased sales tax. The problem with this is that in order to replace the money not raised by ad valorem taxes, the required increase in the sales tax would be upward of 15 percent on each item you purchase. Most exemptions, such as diapers and groceries, would be eliminated. Some, mainly property owners, argue this would be preferable to the current system, which in effect taxes people repeatedly on their homes and businesses. Again, the problem with this system is that a sales tax is regressive and hits those on limited incomes much harder than those with large incomes.
The ad valorem tax, or real estate tax, used to support public education has been under attack in the court system since the 1960s, beginning with the Edgewood case filed in federal court. The federal appellant court, including the Supreme Court, ruled not that the tax system was fair, but that it was not so unfair that it had reached the point of unconstitutionality. The appellant courts followed with a warning that failure to address the problem could very likely involve federal court intervention in the future.
The Edgewood case in the federal system was followed by a case reaching the Texas Supreme Court in which the system of funding education was deemed to have run afoul of the Texas Constitution; specifically, the provision that required the state to offer all citizens a quality or decent education. The basic problem with the tax is that it unfairly treats and punishes children who have the misfortune to live with their parents in poor districts or counties. The current system provides unbalanced amounts available to educate children. As an example, residents of school districts like Mount Belvieu support a quality system of education at a relatively low tax rate because they are fortunate enough to have salt domes within the boundaries of the district filled with natural gas that periodically can be taxed. The gas is not produced in the district but simply is taxed as it passes through the storage in the district on its way primarily to the Northeastern part of the United States. Other districts of low property wealth force citizens to pay a higher tax rate and devote a greater portion of public funds to support public education, with still fewer dollars available to deliver education to their children. In short, the current system was, is and probably will be unfair.
A simple solution, unworkable in Texas, is to support public education with an income tax. It is not likely the people of Texas will in the near future vote for a constitutional amendment that allows an income tax, even though it would totally replace the ad valorem tax on their homes and businesses.
There is another solution that would absolutely resolve the inequity of the current property tax system. As chairman of the Senate Education Committee, I proposed it; Gov. Ann Richards flirted with it very briefly. Sadly, it was grossly misunderstood by the press who failed to note in their reports that the proposed tax was not to be added to the local tax, but replace it. As a result Richards quickly rejected the idea.
The proposal would have preserved only local taxes dedicated to paying off bonded indebtedness. Thereafter, a statewide tax at a uniform rate per $100 valuation would be levied on all property within the state. The money would then be placed in the state treasury and allocated to each district based on the number of pupils. At the time of my proposal, a $1 per $100 tax rate would have raised slightly more than the differing local tax rates. It would have lowered the tax rate for one half of the taxpayers in the state.Such a system would forever end the lawsuits alleging the system of raising taxes and the allocation of state funds for education being unfair.
I have often believed sailboat racing among sailors sailing the same class vessels is the fairest sporting competition existing today. All of the sailors have the same amount of wind, use relatively the same amount of sail, maneuver the same kind of boat, and winning depends primarily on the skill of those who operate the boat. The same should be true of school districts throughout Texas. If every district had the same resources available per student, Texans would quickly learn which districts make efficient use of their money and produce the right result for our children. Maybe it is time for all taxpayers in school districts in this state to get in the same boat.
Carl Parker has practiced law in Port Arthur since 1958. He is a 1958 graduate of the University of Texas School of Law. Elected to the Texas House of Representatives in 1962 and the Senate in 1976, Parker continued to practice law while writing and sponsoring hundreds of bills that became laws relating to every aspect of life in Texas, including many regarding consumer safety. His e-mail is cap1934 [at] aol [dot] com.