THE ALAMO IN SAN ANTONIO
The Texas CPA Society magazine, Today's CPA, published an article written by Jade Walle, CPA, in its November/December 2020 edition entitled, "A Tax Reform Idea Big Enough for Texas." Jade is a partner in a Big Four accounting firm and a member of the AFFT board of directors.
We all know Texas is the largest state in the continental United States geographically speaking. It boasts a gross state product of $1.9 trillion. To put that in perspective, Texas’ economy is roughly the size of the entire Russian economy, and would rank in the top 10 among all the nations of the world. Knowing how big Texas is from a multitude of perspectives, it is fair to ask what kind of state tax reform idea would truly be big enough for Texas?
In his article, Jade highlights the potential benefits of adopting a Texas FairTax system. Remember that Texas already has no state income tax, so Jade envisions Texas’ FairTax replacing its current property tax system that is administered by the 254 different Texas counties as well as its corporate margins tax.
Currently, Texas’ 254 counties spend (not collect) up to an estimated $500 billion annually in property tax administration costs and other expenses. Imagine, 254 different counties all having to lease office space, pay for electricity, salaries, federal matching payroll taxes, printing, postage, aerial imagery, appraisal software, travel, litigation and protests with taxpayers, office equipment, public hearing notices, and the list goes on. The inefficiency is unbelievable, especially when compounded by the large population, size and number of counties in the state.
A state FairTax would provide every Texas resident a refund (aka, "prebate") so there would be no tax on the basic necessities of life. The rate would be set so that the revenue it would generate would replace what is currently being generated by the state’s personal property taxes and the Texas margins tax—a tax on Texas businesses. Those two taxes would be eliminated under the FairTax plan.
Texas is already regarded as one of the most business friendly states in which to set up shop. Replacing personal property taxes and the state’s margins tax with a state FairTax would make it even more so. Also, a state FairTax would save up to $500 billion in expenses that local jurisdictions currently have to pay. That saving alone would allow the FairTax rate to be significantly lower than one might otherwise expect.
Eliminating county property taxes would have the additional benefit of removing an unintended inhibitor to public school excellence. High property taxes make home ownership in higher performing school districts less affordable, thus creating a barrier to entry into those districts. Removing that barrier would make it easier for families with children to move into those districts. That, in turn, would put pressure on lower performing school districts to improve their programs. Said differently, the state FairTax eloquently injects more competition into school district performance thus enhancing the quality of education for everyone.
CONCLUSION
As Jade astutely points out, when a person is looking to buy a home, there’s more to consider than just the home’s purchase price. The family also has to include the property taxes, insurance and maintenance costs. Although it varies by county, the average purchaser of a $200,000 home in Texas will pay an additional $350 a month in property taxes. The average monthly payment on a $180,000 mortgage is $790 a month. This means that the family will not qualify for as large a mortgage and will have to find a less expensive home. Having less money to use to purchase a home may keep them from buying a home in the school district they want for their children.
Additionally, the property tax prevents any of us from ever really owning our own home—even if we pay off our mortgage.
Eliminating the property tax would remove the very real fear that homeowners have that they will not be able to stay in their homes because bureaucrats keep driving the price of home ownership up with constantly increasing property tax rates.
Property tax rates don’t just affect home buyers but also dramatically affect renters. Landlords have to increase the rents they charge in order to cover their costs—which includes the property tax. Eliminate property taxes and the competitive pressures in a free marketplace will drive rents down. It’s a win-win for everybody. Renters pay less and the landlord makes the same profit.
Sam Houston is a Texas hero whose forces captured Santa Ana and gave Texas its independence from Mexico. He said, “There would be no difficulty in securing the rights of the people and the liberties of Texas if men would march to their duty and not fly like recreants from danger. Texas must be defended and liberty maintained.”
Texans have always been seen to have a fierce independent streak in them. They adamantly believe in the importance of the individual over government bureaucrats.
Houston’s sentiments don’t apply just to Texans, but to all people who wish to remain free. The FAIRtax, be it at the state or national level, takes control over the taxes we pay away from the bureaucrats and places it back in our hands.
If you have friends who don’t know about the FAIRtax send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
Thank you for staying FAIRtax strong!The Texas CPA Society magazine, Today's CPA, published an article written by Jade Walle, CPA, in its November/December 2020 edition entitled, "A Tax Reform Idea Big Enough for Texas." Jade is a partner in a Big Four accounting firm and a member of the AFFT board of directors.
We all know Texas is the largest state in the continental United States geographically speaking. It boasts a gross state product of $1.9 trillion. To put that in perspective, Texas’ economy is roughly the size of the entire Russian economy, and would rank in the top 10 among all the nations of the world. Knowing how big Texas is from a multitude of perspectives, it is fair to ask what kind of state tax reform idea would truly be big enough for Texas?
In his article, Jade highlights the potential benefits of adopting a Texas FairTax system. Remember that Texas already has no state income tax, so Jade envisions Texas’ FairTax replacing its current property tax system that is administered by the 254 different Texas counties as well as its corporate margins tax.
Currently, Texas’ 254 counties spend (not collect) up to an estimated $500 billion annually in property tax administration costs and other expenses. Imagine, 254 different counties all having to lease office space, pay for electricity, salaries, federal matching payroll taxes, printing, postage, aerial imagery, appraisal software, travel, litigation and protests with taxpayers, office equipment, public hearing notices, and the list goes on. The inefficiency is unbelievable, especially when compounded by the large population, size and number of counties in the state.
A state FairTax would provide every Texas resident a refund (aka, "prebate") so there would be no tax on the basic necessities of life. The rate would be set so that the revenue it would generate would replace what is currently being generated by the state’s personal property taxes and the Texas margins tax—a tax on Texas businesses. Those two taxes would be eliminated under the FairTax plan.
Texas is already regarded as one of the most business friendly states in which to set up shop. Replacing personal property taxes and the state’s margins tax with a state FairTax would make it even more so. Also, a state FairTax would save up to $500 billion in expenses that local jurisdictions currently have to pay. That saving alone would allow the FairTax rate to be significantly lower than one might otherwise expect.
Eliminating county property taxes would have the additional benefit of removing an unintended inhibitor to public school excellence. High property taxes make home ownership in higher performing school districts less affordable, thus creating a barrier to entry into those districts. Removing that barrier would make it easier for families with children to move into those districts. That, in turn, would put pressure on lower performing school districts to improve their programs. Said differently, the state FairTax eloquently injects more competition into school district performance thus enhancing the quality of education for everyone.
CONCLUSION
As Jade astutely points out, when a person is looking to buy a home, there’s more to consider than just the home’s purchase price. The family also has to include the property taxes, insurance and maintenance costs. Although it varies by county, the average purchaser of a $200,000 home in Texas will pay an additional $350 a month in property taxes. The average monthly payment on a $180,000 mortgage is $790 a month. This means that the family will not qualify for as large a mortgage and will have to find a less expensive home. Having less money to use to purchase a home may keep them from buying a home in the school district they want for their children.
Additionally, the property tax prevents any of us from ever really owning our own home—even if we pay off our mortgage.
Eliminating the property tax would remove the very real fear that homeowners have that they will not be able to stay in their homes because bureaucrats keep driving the price of home ownership up with constantly increasing property tax rates.
Property tax rates don’t just affect home buyers but also dramatically affect renters. Landlords have to increase the rents they charge in order to cover their costs—which includes the property tax. Eliminate property taxes and the competitive pressures in a free marketplace will drive rents down. It’s a win-win for everybody. Renters pay less and the landlord makes the same profit.
Sam Houston is a Texas hero whose forces captured Santa Ana and gave Texas its independence from Mexico. He said, “There would be no difficulty in securing the rights of the people and the liberties of Texas if men would march to their duty and not fly like recreants from danger. Texas must be defended and liberty maintained.”
Texans have always been seen to have a fierce independent streak in them. They adamantly believe in the importance of the individual over government bureaucrats.
Houston’s sentiments don’t apply just to Texans, but to all people who wish to remain free. The FAIRtax, be it at the state or national level, takes control over the taxes we pay away from the bureaucrats and places it back in our hands.
If you have friends who don’t know about the FAIRtax send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
Yours In Liberty! Yours In Freedom!
Steve Hayes
Chairman, Americans For Fair Taxation
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