Unfogged Mobile

Local taxes
Posted by Heebie-Geebie on 09.22.23

I have a question about an extremely constrained situation, where lots of normal, reasonable courses of action are off the table. The basic question is: under what circumstances is lowering taxes the most ethical course of action?

Some details: taxes in Texas are extremely regressive, but the overall tax burden is low-ish. According to this, the bottom 20% pays 13% of their income in taxes, the middle 60% pays 9.7% of their income, and the top 20% only pays 3% of their income. The two main taxes are sales tax - 6.25% statewide - and local property taxes, both to the city and the school district. The total state-local tax burden is 8.6%, which is comparatively low - we rank 6th in the country, let alone comparisons with enlightened topless Europe.

Loosely speaking, locally, taxes have stayed flat and appraisals have increased dramatically. The median home value in 2015 was $189K and now it is $344K. (However, there is a state law that your appraisal for tax purposes can't increase more than 10% per year.)

On a $344K home, you're paying $1.133782 per $100 to the school board, $0.603/$100 to the city, and $0.3125/$100 to the county, so you're paying $7049.53 in property taxes per year. I can easily imagine that the kind of person who bought a $189K home in 2015 is very stressed out by having to pay $587.50 a month to the tax collector in 2023.

Next constraint: I want to only focus on city property taxes - that $172.86 portion of the $587 monthly payment. The school and county conversations aren't happening right now.

In addition, raising taxes on the wealthy is off the table, and lowering the sales tax is off the table. (There is a local 2% sales tax as well.)

So the question has to be: are we delivering enough benefit to justify this tax bill? How do you evaluate if a community member is getting enough value from the city to justify this tax bill?

If your government provides free health care or free education, you can compare it to how much it would cost if it were privatized. But how do you measure the value of what community members get from a local government? There's no model for privatized parks, roads, etc that would feel convincing to a random person.

In other words, there are a lot of people that I highly respect who are railing against taxes being super high, and I want to take it seriously. If I'm going to argue that they should shut up and pay their taxes, then I want to have a real argument why. Or conversely, if I'm going to sell out my beliefs about the patriotism of taxes, I want to have a well-reasoned argument about why.

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