Texas Landowners Council

Property Tax


Facts about school property tax

By Jimmy Gaines

Property taxes currently pay $20 billion of the estimated $36 billion required to support public schools in Texas each year.

Texas real estate produces approximately 2 percent of the annual profits in Texas but pays 56 percent of the cost of Texas public schools in property taxes.

Texas public schools are currently financed 56 percent from property taxes, 41 percent from other state sources, and 3 percent from federal sources.

The Texas Lottery contributes no more than 2.5 percent to the funding of public education.

The Texas Constitution provides that an income tax can only be enacted with voter approval and can only be used to replace school property taxes. It is not likely that Texas voters would approve an income tax without a constitutional provision that neither the income tax nor property taxes could be increased thereafter without statewide voter approval.

Increasing the sales tax will not produce enough money to take the burden off of property taxes. Industries that make approximately 80 percent of the income in Texas are not always subject to sales tax. Most of the expenditures of manufacturing, service industries, wholesale and retail trade are not subject to sales tax because much of their profit is put into investments, which are not subject to sales tax.

In reality, the top six industries and professions--manufacturing, transportation, communication, utilities, services, wholesale and retail trade--annually produce approximately 86 times the income of all Texas real estate, which reveals that funding public schools with property taxes is completely out of proportion with the Texas economy. Their school property taxes amount to little more than 2 percent of their profits, when real estate pays 56 percent of its profits to school property taxes.

Myths concerning agricultural valuation

By Jimmy Gaines

The Texas Legislature has for years recognized that land used only for production of crops and livestock cannot produce market value taxes and has provided owners the alternative of appraising the land according to use and production. One myth is that agricultural valuation is being abused and should not be available to owners whose primary occupation is not agriculture. Land subject to agricultural valuation is usually taxed a minimum of 15 percent of any net gain produced by the property whether from agricultural production or the sale of the property.  Agricultural valuation is only applied to crop land or pasture land. Houses and most other improvements on farms and ranches are taxed at full market value. The land not taxed at market value sends no children to school and does not require public services. Such land costs taxpayers nothing. On the contrary, it is an enormous benefit to the public as green space and wildlife habitat, and it produces low-cost food. If all agricultural land was taxed at full market value, which is what many lawmakers would like to see happen, most landowners would be forced to sell to developers or lose their land to foreclosure because the taxes would far exceed the income the land produces.

If the use of land appraised as agricultural is changed, and agricultural valuation is removed from the property, full market value taxes for the previous five years must be paid. This penalty has amounted to as much as $4,000 per acre and typically will be 15 percent of the net gain. Taxing according to production is the solution, not the problem.

Bandera County Courier Farm and Ranch News:  TLC Articles

“TPPF opposes property tax”

By Lauren Stucky Flake, April 24, 2008


“The Case for Private Property (And the elimination of Property Tax in Texas)”

by Debra Medina, We Texans August 10, 2010

Texas A&M University Real Estate Center:  Tax (Property) Publications

Texas Public Policy Foundation April 2009:  “Enhancing Texas’ Economic Growth through Tax Reform:  Repealing property taxes and replacing the revenues with a revised sales tax”

“Property Taxes in and Around Texas”

By The Honorable Talmadge Heflin and James Quintero, Texas Public Policy Foundation

Center for Fiscal Policy February 2010

“Yes, Texas Can End the Property Tax”

By The Honorable Talmadge Heflin, Texas Public Policy Foundation February 2, 2010