Property Tax Reform
Property Tax Relief Schedule
Objective: To provide property tax relief through an initial reduction in the tax rate and a structured plan to manage future increases in assessed property values, ensuring predictability and fairness for property owners. The relief schedule includes a reduction in the property tax rate by 0.25 basis points and a controlled framework for how property assessments can increase over a five-year period, indexed to inflation and property value trends.
1. Immediate Property Tax Rate Reduction:
Rate Reduction: Implement a reduction of the property tax rate by 12% cut or 0.22 basis points (0.0022) across the board. This reduction applies to all local jurisdictions including counties, cities, school districts, and other taxing entities.
Example:
Current Effective Tax Rate: 1.80%
New Effective Tax Rate: 1.58% (0.22 basis points)
2. Property Assessment Increase Schedule:
To manage future increases in assessed property values, the following schedule will be implemented over a five-year period:
Year 1:
Assessment Cap: Limit annual increases in property assessments to 3% or the rate of inflation (whichever is lower).
Indexation: Use the Consumer Price Index (CPI) for All Urban Consumers (CPI-U) to determine the rate of inflation. The lower of the two values will be used.
Year 2:
Assessment Cap: Increase the cap to 4% or the rate of inflation (whichever is lower).
Indexation: CPI-U will continue to be used. Review and adjust the cap based on inflation trends.
Year 3:
Assessment Cap: Increase the cap to 5% or the rate of inflation (whichever is lower).
Indexation: CPI-U will guide the inflation adjustment. Adjust the cap if inflation trends warrant.
Year 4:
Assessment Cap: Maintain a cap of 5% or the rate of inflation (whichever is lower).
Indexation: Continue using CPI-U for inflation adjustments. Ensure that the cap does not exceed the inflation rate.
Year 5:
Assessment Cap: Re-evaluate the cap based on the cumulative impact of the previous years and current economic conditions. Adjust to a maximum of 6% or the rate of inflation (whichever is lower).
Indexation: CPI-U will be used. Review economic conditions to determine the final cap.
3. Monitoring and Adjustment:
Annual Review: The tax relief schedule and cap adjustments will be reviewed annually to ensure compliance with inflation rates and economic conditions.
Public Reporting: Provide annual reports on assessment increases, inflation trends, and the impact of the property tax relief schedule. Ensure transparency in the adjustment process.
4. Implementation Plan:
Legislative Action: Advocate for the passage of legislation to implement the initial property tax rate reduction and the five-year assessment increase schedule.
Administrative Setup: Develop administrative procedures for applying the tax rate reduction and monitoring property assessments. Coordinate with local appraisal districts to ensure consistent application.
Communication: Launch an awareness campaign to inform property owners and local officials about the changes to the property tax rate and the assessment increase schedule. Provide clear information on how the new schedule will be applied.
Ongoing Evaluation: Continuously evaluate the effectiveness of the tax relief schedule in providing financial relief to property owners and maintaining a fair tax system. Adjust the program as needed based on feedback and economic conditions.
Benefits:
Immediate Relief: The reduction in the property tax rate provides immediate financial relief to property owners.
Controlled Increases: The structured assessment increase schedule ensures that property values are adjusted in a controlled manner, protecting property owners from sudden, large tax increases.
Predictability: Property owners benefit from a predictable tax environment, making long-term financial planning easier.
Economic Stability: The schedule balances property tax relief with economic considerations, promoting stability in local tax revenues and supporting community services.
Conclusion: The proposed property tax relief schedule aims to provide immediate relief through a reduction in the tax rate and a structured approach to managing future property assessment increases. By implementing this plan, Texas can offer fair and predictable tax relief to property owners while maintaining a balanced and sustainable tax system. We urge policymakers to support this proposal and collaborate on its successful implementation.
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