11.15.06

Sham Apprasal Cap Plan Exposed As Sop To The Rich

Posted in Around The State at 10:29 am by wcnews

Surprise, surprise! Lowering the cap on annual appraisals would benefit the wealthy and hurt everyone else. This is an excellent article from Rick Casey at the HChron on the subject, ‘Tax reform’ is tax shift.

The governor sent us and we’re here to help you.

[…]

As (Tom) Pauken (former head of Texas GOP) and his colleagues talk about beating the scourge of “appraisal creep” — the increase in local property taxes not because of higher tax rates but because of higher appraisals — do what you should do whenever slick folks in suits tell you what your problem is and how they’re going to solve it.

Hold onto your wallets.

The article also tells us about a house committee report that was finished two years ago which describes what will happen if this is changed.

The study’s results were such that House Speaker Tom Craddick, who like Gov. Perry wanted to lower the cap, kept a lid on it for more than four months before the Dallas Morning News posted it on its Web site.

Here are some of its conclusions:

•”Appraisal caps unfairly shift the property tax burden from the wealthiest of property owners to the less wealthy.” The report cited a study of Dallas County indicating that 90 percent of the properties benefiting from the current 10 percent cap were north of Interstate 30, where the more affluent neighborhoods are.

People in older neighborhoods and tract-home suburbs pay taxes on the full values of their houses while those who tend to be more affluent get the tax breaks.

The very rich benefit even more since, as Sunday’s column demonstrated, their multimillion-dollar houses are almost always generously undervalued on the tax rolls.

•”Just as appraisal caps shift the property tax burden from some homeowners to others, they also shift the tax burden to businesses, industries, and renters, who don’t benefit from the caps.”

•Caps could hurt the real estate market. When a house is sold, the caps are lifted and it is typically assessed at the sales price (except with the cheapest and most expensive houses, whose sales prices tend not to be listed).

The report argues that a family whose more modest house is capped may not buy a larger house because market-rate assessment would mean a large tax hike.

•Some cities will be hurt much more than others. Houston, where the movement to lower the cap began, would not be hurt as much as, say, Garland. Garland, a city of 200,000 with few retail establishments, gets little sales tax income and relies heavily on property taxes.

The nonpartisan Legislative Budget Board last year estimated the cost of lowering the cap to 5 percent.

Projected loss to Texas cities would be $91.5 million the first year, rising to $135.3 million the fourth. Counties would lose only slightly less.

School districts wouldn’t fare so poorly, but only because under the funding formula the state would have to make up for their losses — $351 million the first effective year, rising to $466 million in the third year.

Pauken, heading the group that is here to help us, has a solution. He wants to raise the sales tax by .5 percent.

So the 50 percent of Houstonians who rent and all of us whose appraisals don’t go up more than 5 percent a year get to pay more taxes so that the people in the hottest real estate markets get yet another tax break.

Half a percent isn’t that much, you say?

Well neither, for that matter, is the difference between a 5 percent cap and the current 10 percent cap.

[…]

Most of us don’t mind helping those in need. We just don’t want the Pauken Plan: Tax the poor to benefit the rich.

I know I excerpted most of this but I recommend reading the whole thing.

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