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Texas has some of the highest property taxes in the nation
Former GOP state Sen. Don Huffines’ recently launched gubernatorial bid is wagering that Republican Gov. Greg Abbott isn’t Republican enough for Texas.
According to his nascent campaign website, the border is too open, the voter rolls are too rife with "illegal aliens," and the taxes are too high. To cure the state of its taxation problem, Huffines’ campaign proposes an unusual solution for a state that already doesn’t collect income taxes — the elimination of property taxes altogether.
"Texans have some of the highest property taxes in the nation, and the tax only goes up," his campaign website says.
"We will put the broken property tax system on a path to zero," it continues.
There’s little question that property taxes in Texas have generally been rising year over year. The Texas Comptroller’s Biennial Property Tax Report shows that single family home values have been on the rise since 2010, resulting in a corresponding rise in the property taxes levied by local governments in each of those years.
In 2010, local governments in Texas collected $40.2 billion in property taxes. By 2019, the latest year for which data is available, that number had risen to $67.2 billion. Nearly half of these totals is collected from property taxes levied on single family homes.
But has this rise launched Texas’ taxes into the realm of high-tax states like New York, California and New Jersey? Does Texas now have "some of the highest property taxes in the nation," as Huffines claims?
State and local governments depend on tax revenue flowing from three different categories, explained Kevin Erdmann, a tax policy expert at the Mercatus Center at George Mason University.
"There's three pretty basic areas of taxation: sales tax, income tax and property tax," he said. "Those are the big three to choose from and each state has chosen to weight each one slightly differently. But at the end of the day they all have bills to pay."
Texas is one of nine states that doesn’t collect income tax revenue, therefore relying more heavily on the two other areas of taxation.
"I don't think there's much dispute about Texas focusing on property taxes. Typically in discussions about tax bases, Texas will be referenced as a state that's a good example of a state that depends on property taxes as a revenue source," Erdmann explained.
But there isn’t a perfect method for comparing Texas’ dependence on property tax revenue to other states. This is partly because states tax real property in a variety of ways. For instance, while some states impose a tax rate on a home’s market value, others impose it on a percentage of the market value, according to the Tax Foundation, a non-partisan and pro-business think tank. In some states, counties also can differ in how levies are calculated.
According to Janelle Cammenga, a policy analyst with the Tax Foundation’s Center for State Tax Policy, there’s a variety of ways property tax burdens on residential properties can be measured.
"There are a couple different ways you can compare, none of them are perfect, but they can all kind of give you an idea of where Texas is going to lie," Cammenga said.
For instance, state rankings could be organized by property tax collections per capita, which would provide a rough estimate by dividing a state’s total residential property tax payments by its number of residents.
Under this methodology, Texas would have the 13th highest property tax burden with Texans paying $1,973 per year, according to a Tax Foundation analysis. Washington D.C., New Jersey and New Hampshire would top that list, each with over $3,000 in annual per capita property tax payments.
Another way to rank states would be to compare states’ effective tax rates on owner-occupied housing, or the average amount of residential property tax payments. This method takes home values into account by expressing this average amount as a percentage of home value.
Here, Texas would rank No. 6, with homeowners paying about 1.6% of their home value in property taxes per year, according to the Tax Foundation’s analysis. New Jersey again tops that list, followed by Illinois and New Hampshire.
This methodology also was used in an analysis cited by Huffines campaign spokesperson. According to this Wallet Hub study, released earlier this year, Texas’ effective tax rate is the 7th highest in the nation.
A third way to compare is by looking at how property tax burdens compare across counties. For instance, which states have the most counties with median property tax payments of over $5,000?
New Jersey has 19 counties in which the median property tax burden is higher than $5,000 per year — the highest in the nation. Texas would rank 7th, after New York, Illinois, California, New Hampshire and Connecticut, according to the Tax Foundation.
In Texas, the high watermark is set by Collin County, where the median property tax burden is $5,600. Fort Bend County and Travis County follow with median taxes at $5,563 and $5,439, respectively.
"It’s safe to say that Texas tends to have pretty high property taxes," Cammenga said. "Whether or not it’s the highest — that really hard to say. They're probably not, but it is up there."
It's unclear exactly how feasible it would be for a state to eliminate property taxes altogether, especially one that already doesn’t collect income taxes, experts said. In 2018, property taxes made up 44% of state and local tax collections in Texas.
Both experts we spoke with agreed that, if Huffines were elected and able to fulfill this campaign promise, Texas would be the first state in the nation to eliminate property taxes.
"Eliminating that is a really tall order. That's almost half of (Texas’) tax collections," Cammenga said. "I don't know of a state that has eliminated property taxes, because it's such an essential part of local finances."
"I don't think there's another state that has literally zero property tax," Erdmann said.
Huffines has pledged to eliminate property taxes if elected governor. He justifies this pledge by claiming that Texas has "some of the highest property taxes in the nation."
There are several different ways to compare and rank states’ property tax burden. From the ranking methodologies reviewed here, Texas has between the 6th highest and 13th highest property taxes.
Huffines’ statement is somewhat subjective — there’s no absolute way to define "some of the highest." Nonetheless, experts generally agree that, even though there’s no standard way to compare and rank states‘ property tax burden, Texas is heavily dependent on property tax revenue.
We rate this claim Mostly True.
Huffines For Governor, Issues: Property tax, May 10, 2021
Texas Comptroller of Public Accounts, Biennial Property Tax Report Tax Years 2018 and 2019, Dec. 2020
Phone interview with Kevin Erdmann, visiting fellow with the Mercatus Center at George Mason University, May 12, 2021
Phone interview with Janelle Cammenga, policy analyst with the Tax Foundation’s Center for State Tax Policy, May 19, 2021
Tax Foundation, How high are property taxes in your state?, Aug. 26, 2020
Tax Foundation, State & Local Property Tax Collections per Capita, March 10, 2021
Tax Foundation, Property Taxes Paid as a Percentage of Owner-Occupied Housing Value, March 10, 2021
Wallet Hub, Property Taxes by State, Feb. 23, 2021
Tax Foundation, Where Do People Pay the Most in Property Taxes?, Aug. 19, 2020
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Texas has some of the highest property taxes in the nation
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