Texas Prop 1 little talked about provision

[zork]

The upcoming elections have Prop 1 which seemingly mainly deals with increasing homestead exemptions,etc. However, check out this wording near the end:

... prohibiting the enactment of a law that imposes a transfer tax on a transaction that conveys fee simple title to real property.

Is there a real estate transaction tax in the works, state or federal, that nobody is talking about? I understand it that fee simple transactions are basically real property transactions.

Here is the wording as of a month or so ago for the Prop 1 in entirety :

November 3, 2015 Constitutional Amendment Election Ballot Language For Prop 1
Proposition 1 – SJR 1

“The constitutional amendment increasing the amount of the residence homestead exemption from ad valorem taxation for public school purposes from $15,000 to $25,000, providing for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect the increased exemption amount, authorizing the legislature to prohibit a political subdivision that has adopted an optional residence homestead exemption from ad valorem taxation from reducing the amount of or repealing the exemption, and prohibiting the enactment of a law that imposes a transfer tax on a transaction that conveys fee simple title to real property.”

http://smcorridornews.com/news/1777...ents-that-all-texans-will-vote-on-part-1.html

Any input, comments, etc? What say you?

 

[n64ra]

i say i'd like to know too

 

[Mr. Deez]

I've e-mailed a good friend who's close to the action, and I'll let you all know what he says. He's a staunch conservative, but he doesn't ******** and doesn't kiss anybody's *** (even to his own detriment), so I value his take on things.

Nevertheless, until I hear back from him, I'll speculate a little. I don't have anything facts to base it on - just my instincts. First, the Legislature wanted to cut property taxes and understandably so, and raising the homestead exemption is one way they can do that. Second, when the Legislature passes property tax relief, the first thing the local governments try to do is steal the property tax relief. Sometimes they do it by raising rates, but they usually don't have the balls to do that or are already taxing at the highest legal rate. Instead, they go to the appraisal districts and get them to boost appraisals. That way they can say they didn't support a tax increase and pin the blame on an unelected appraisal district. However, the Legislature is onto their racket and has been considering enacting tougher restrictions on it (appraisal or revenue caps, etc.), and I could see a real estate transfer tax as a possible way for local governments to make up the lost money even if their ability to rig the appraisal system gets gutted. Of course, the Legislature has never passed appraisal or revenue caps, because the local governments hire some of the top lobbyists in Texas with your tax dollars who lobby the Legislature not to do it, but every session, momentum builds to pass them. Prop. 1 could take that weapon out of the local governments' hands before they enact it.

Side note - there is another side to this issue. The local governments (cities, school districts, etc.) will tell you that when the Legislature passes property tax relief, it's a chicken-**** thing to do, and they have a point. The state doesn't collect property taxes, so it can mandate the relief without it hurting their bottom line. Politically, it's an easy sell. They can tell homeowners they cut their taxes without having to come up with the budget cuts necessary to make up for it. Frankly, it is a stupid-*** system. If local governments have to rely on property taxes, then they should make the rules. However, they should also have to answer to the public like other elected officials do - in partisan elections held on the real election date in November of even-numbered years, and they would never go for that.

 

[Mr. Deez]

Here's the response from my Bro on the inside. My clarifications of some of his lingo are in brackets. What's in parentheses are his comments.

[Mr. Deez,]

From a policy standpoint, there was no reason to merge the two. A homestead exemption does require a constitutional amendment. But the transfer tax ban doesn't have to be attached to it.

This provision was added to the amendment at the request of the Texas Association of Realtors to get their enthusiastic support for the SJR [Senate Joint Resolution - the legislation the Legislature passed to put the amendment on the balltot]. [Speaker of the House] Joe Straus and [Rep.] Dennis Bonnen [R-Angleton, Chairman of the House Ways & Means Committee] didn't want to increase the homestead exemption or do anything to reduce property taxes. Bonnen's "alternative" -- which was not adopted -- was reducing the sales tax from 6.25 to 5.95 percent (and that was only because the rest of the caucus didn't want to be portrayed "against" tax cuts). By putting the transfer tax ban on the amendment, the realtors lobbied the rank-and-file house members, putting pressure on Straus and Bonnen.

There has always been the proposal out there -- adamantly opposed by the Texas Association of Realtors -- to replace the property tax with a sales tax on property. From a policy and political standpoint, I've always viewed the idea of swapping the property tax with a transfer tax as unworkable. A sales tax on property would harm real estate market and the volume of sales. Government spending from property taxes doesn't.

Hope this is helpful.

[Deez's Bro on the Inside]

 

[Monahorns]

I for one am glad local governments don't have the only say-so on how they tax us. It is a good thing to have them accountable to another (higher) governmental authority. The city council elections in Austin sure seemed rigged, they are all staunch collectivists, even in the more moderate outskirts of town. I voted for Prop 1 yesterday.

 

[Larry T Spider]

I prefer local control. If the tax is local, then the locals should have as much control as possible over how much is taxed and how it is spent. Just because a higher form of government doesn't like the way the locals are handling it shouldn't give them the right to come in and change it. We all ***** about the feds doing it but seem to be ok with the state doing it.

 

[Mr. Deez]

I for one am glad local governments don't have the only say-so on how they tax us. It is a good thing to have them accountable to another (higher) governmental authority. The city council elections in Austin sure seemed rigged, they are all staunch collectivists, even in the more moderate outskirts of town. I voted for Prop 1 yesterday.

Since adopting single member districts, that's no longer the case. Ellen Troxclair and Don Zimmerman are both pretty conservative. In fact, Zimmerman is a bit of a nut. Also, if it has any bearing, Ellen Troxclair is hot.

And at least in theory, I agree with Larry. If local officials have real accountability (elected in partisan elections in November of even-numbered years), I would have no problem with eliminating the limitations on their ability to raise money. If the City of Austin wants to tax its citizens into bankruptcy, their remedies are to elect a different council or to move. However, that would have a moderating effect. The council candidates would have to earn the support of a much larger constituency.

 

[Larry T Spider]

I just cant get behind the idea that bigger government that is farther away is in any way better. But, I have found that people are willing to give up local governance if the higher level is more in tune with their political beliefs. Then when the political tides turn, they are stuck wishing they never gave away the power that comes with local government.

It's not completely analogous but it reminds me of republicans that were fine with an increase in federal power under Bush but suddenly became champions of states rights the day Obama was sworn in. The same dems that are fine with his executive orders now will be screaming bloody murder when a conservative does the same thing later.

 

[Monahorns]

Every outcome that I have seen from the Austin City Council so far has been negative. Every candidate that I read about said their top priority (or 2nd) was affordability. So far I don't have a good reason to trust this new set up or the voters of the other districts and welcome limitations being placed on them. The issue with Federal vs State comes from the US Const. I don't know that the Texas Const. limits its power like the US one. If it does then I agree. Otherwise I appreciate the help because while I could leave Austin if the taxing becomes too onerous I would rather and it would be better for the city overall to have any government authority do something to improve Austin's affordability.

 

[Monahorns]

My priority for government is that it is limited in scope, restrained financially, and promotes freedom broadly. I don't care what group that results from just as long as it is accomplished.

 

[zork]

and that they save Lions Muny.

 

[Mr. Deez]

The issue with Federal vs State comes from the US Const.

Yes, but that isn't arbitrary. It's there for a reason. It's presumed that the government that is closest to the people will be the most responsive to them. That's true for federal vs. state, but it's also true for state vs. local.

You may prefer weak local government, because you are a conservative living in a liberal city within a conservative state. However, I think your preference is result-oriented rather than principled.

When I worked at the Capitol, the push from the Right was for local control, because Democrats ran the Legislature and the TEA. Most conservatives didn't like liberal state officials dictating what their cities and school districts could and could not do. They were right then, but now some of you want to throw out that system because you don't like what some liberal cities and school districts choose to do with the power they now have. I think that's BS. If you like local control, then you should respect the decisions of local officials, and if you don't, then you should respect the decisions of state and even federal officials.