You Can Vote for Tax Relief in Texas on Nov 3, 2015

You Can Vote for Tax Relief in Texas on Nov 3, 2015

You can vote for tax relief in Texas on Nov 3, 2015, if you want. You don't have to vote for Proposition 1. As citizens we can vote for or against anything on the ballot.

Because Texas does not have a state income tax, property taxes here are among the highest in the country. Government does need funds to take care of its functions. Since governments are only able to raise funds by selling assets, collecting fines, fees, or assessing taxes, citizens should have an interest in controlling the taxes imposed. (Of course reducing expenses is hardly ever considered an option for a government entity. That gets some lip service around election time.)

So that brings us to Proposition 1, to be voted on Nov 3, 2015. You can read the specific wording of the proposition, Texas Homestead Exemption for School District Property Tax Amendment, Proposition 1 (2015).

As I read the proposition, here are the key features:

• Increases the Homestead Exemption from $15,000 to $25,000. The exemption was last increased in 1997 from $5,000 to the current $15,000 limit.
• Texas Constitution will be amended to ban state and local governments from imposing transfer taxes on real estate transactions.
• The state will shift funds to school districts to make up funds loss from increasing the homestead exemption.

The issue regarding the banning possible transfer taxes on real estate transactions is not a trifling matter. Transfer taxes are a form of sales tax. Think of it as a sales tax which would be set by the state, a county and or city, imposed when a property ownership is transferred.

I reviewed information on  a state jurisdiction where transfer fees were effective in 2014. The rate was $1.10 per $1,000 of net value. In addition, some counties and cities also impose transfer taxes. Here is what it might look like were such fees allowed here at similar rates for a home priced at the average for recent homes sold in the San Antonio area:

          Average Sales Price                       $220,000

        State Transfer Fee                          $      242        ($1.10 per $1,000)

        County Transfer Fee                       $      462        ($2.10 per $1,000)

        City Transfer Fee                            $      880        ($4.00 per $1,000)

The chart is just illustrative and the transfer fee could be more or less than described. So at the rates shown the additional fee to sell the property would be increased by almost $1,600. Best to enact the ban before it can take root, in my opinion.

Early voting is in effect now through Oct 10, 2015. You can vote for tax relief in Texas on Nov 3, 2015.