Texas Property Tax Issues
The Texas Association of REALTORS® currently opposes efforts to reduce the property tax appraisal cap from its current position of 10%. Lowering the property appraisal cap creates havoc within the appraisal system.
Issue
Limiting property tax appraisals was enacted by the Texas Legislature in 1997 and was fully implemented for the 1998 property tax year. The cap on appraised values is currently only applicable to residential homesteads. While the political pressure may be great to lower the cap percentage, there are consequences for doing so. Appraisal caps are discriminatory, ill-advised, and controversial.
Historically, a taxpayer’s gripe with any taxing system is usually rooted in the belief that the person is paying a disproportionate share of a tax. This is true under any taxing structure: income, property, sales, or franchise. While the allure to cap property tax appraisals is high, the consequence of doing so leads to an enhancement of a taxpayer’s resentment to the taxing structure. For example, the current appraisal cap shields hundreds of millions of dollars from local taxation.
The average residential homeowner lives in a modest neighborhood and on the average experiences a yearly increase in property value between 1% and 3%. This large group clearly does not benefit from the current cap of 10% and subsidizes property owners with higher incomes. This occurs because more prominent homeowners consistently experience higher increases on a yearly basis, and some homeowners experience double-digit increases.
A lowering of the property appraisal cap will only provide more of a benefit to this small number of affluent homeowners.
