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This Tax Foundation chart shows its estimate of the property tax burden on homeowners by state based on 2013 data. This Tax Foundation chart shows its estimate of the property tax burden on homeowners by state based on 2013 data.

This Tax Foundation chart shows its estimate of the property tax burden on homeowners by state based on 2013 data.

By W. Gardner Selby December 1, 2016

Dan Patrick mostly right Texans pay nation's sixth-highest property taxes

After Texas Lt. Gov. Dan Patrick saluted legislation potentially giving voters more sway over local property taxes, we wondered afresh about how Texas ranks nationally in terms of property tax burden.

Patrick, talking up a proposal hatched by fellow Republicans led by Houston state Sen. Paul Bettencourt, said in a Nov. 29, 2016, press release: "Texans pay the sixth-highest property tax in the nation, and Texans have told us loud and clear that common-sense property tax reform legislation is long overdue."

In January 2016, we found Mostly True the same claim by a Bexar County legislative aspirant. The business-oriented Tax Foundation, a national group, drew on 2013 Census Bureau data to map the average amount of residential property tax paid as a percentage of home value state by state. By that metric, the Texas rate of 1.9 percent proved higher than the rates in 44 states; it was topped by the rates for Wisconsin, Connecticut, New Hampshire, Illinois and No. 1 New Jersey at 2.38 percent. Still, we noted, property taxes in Texas are levied locally in Texas, resulting in ample differences in the burden depending on where taxpayers live.

Rankings yet to be updated

Not a lot has changed since we reached that conclusion.

For starters, the rankings — showing Texas with the sixth highest "mean effective property tax rate on owner-occupied housing" — haven’t been updated, the foundation’s Jared Walczak said to our inquiry.

Yet, Walczak also told us by email, "this does not make Texas a high-tax state. Texas has chosen to rely more heavily on property taxes, and less heavily on other taxes, than many peer states, foregoing some altogether. The state's tax structure is an important part of its economic success, and it is inevitable that, when a state foregoes an individual income tax, some other tax will be somewhat higher than it might otherwise have been."

In fact, the foundation has previously reported that in 2012 Texas ranked 46th in state-local taxes per resident.

Why property taxes can be high

Property taxes might be higher here because unlike most states, Texas levies no state income tax. Notably too, unlike in some states, Texas’ property tax rates are set locally, not by the state, according to the Texas state comptroller, with government units spending the revenue to provide local services including schools, streets and roads, police and fire protection and many others.

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Moreover, the state lacks the constitutional authority to levy a property tax, as the Texas Legislative Council noted in a 2002 overview of local taxes statewide. Generally under the current system, a county appraisal district does an annual property valuation, then each area city, county, school and special district (like hospital and road districts) sets the respective tax rate necessary to raise the money needed to fund the related adopted budget.

And according to Census data, property taxes in 2013, the latest year of available data, were the source of 81.6 percent of local tax revenue in Texas (the national average for this figure was 46.7 percent). Updated information is to be posted Dec. 9, 2016, bureau spokesman Sean Patrick told us by email.

Regional differences

When we looked into this topic before, advocates including Dick Lavine of the liberal-leaning Center for Public Policy Priorities and Dale Craymer of the business-backed Texas Taxpayers and Research Association suggested we consider a comparison study by the Lincoln Institute of Land Policy showing that property owners in the biggest cities of Texas, especially Houston and San Antonio, had some of the highest property taxes in 2014 compared with large cities in other states.

That remained so the next year, according to a June 2016 institute study indicating, for instance, that El Paso homeowners in 2015 ranked No. 3 among the country’s 50 most populous cities in homestead property taxes on a $150,000 property or $300,000 property. Among the 50 cities, homestead taxes in large Texas cities including Austin, Dallas and San Antonio ranked No. 5 (Fort Worth) to No. 13 (Houston), according to the report.

The disparity between property taxes by county comes through in real-dollar terms, although measures of taxes in terms of dollars paid can be distorted by the difference in home prices from county to county. A Tax Foundation map shows in real dollars just how much property taxes vary from county to county based on IRS data reflecting the amount of real estate taxes deducted from federal taxes. In 2013, Texas counties with residents paying the most were Travis ($7,553), Kendall ($6,916) and Fort Bend ($6,813), while those paying the least are Dickens ($1,325), Stonewall ($1,425) and Hudspeth ($1,450).

Another factor to think about when considering the property tax burden for the average Texan is the rate of home ownership. The Tax Foundation map showing Texas tied for sixth-highest in property taxes considered the percentage of home value that’s paid in property taxes on owner-occupied housing. In 2015, 61.1 percent of Texas housing was owner-occupied, tying the state with Oregon for the nation’s sixth-lowest rate, according to the Census Bureau.

Our ruling

Patrick said: "Texans pay the sixth-highest property tax in the nation."

While it may be true that on average, Texas property taxes are the sixth-highest in the nation, the actual taxpayer burden on residents can vary greatly by locality, making the average less representative.

We rate the claim Mostly True.

MOSTLY TRUE – The statement is accurate but needs clarification or additional information. Click here for more on the six PolitiFact ratings and how we select facts to check

Our Sources

Truth-O-Meter article, "Jeff Judson claims Texas has the sixth-highest property taxes in the nation," PolitiFact Texas, Jan. 22, 2016

Email, Jared Walczak, policy analyst, Tax Foundation, Nov. 30, 2016

Report, "Overview of Local Taxes in Texas," Texas Legislative Council, November 2002 (accessed Nov. 29, 2016)

Reports, Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence, "50 State Property Tax Comparison Study," April 2015; "50-State Property Tax Comparison Study For Taxes Paid in 2015," June 2016

Email, Sean Patrick, deputy chief, internal communications branch, Public Information Office, U.S. Census Bureau, Nov. 30, 2016

Chart, "PERCENT OF OCCUPIED HOUSING UNITS THAT ARE OWNER-OCCUPIED - United States -- States; and Puerto Rico," 2015 American Community Survey 1-Year Estimates, U.S. Census Bureau (accessed Nov. 30, 2016)

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More by W. Gardner Selby

Dan Patrick mostly right Texans pay nation's sixth-highest property taxes

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