PUBLISHER’S NOTE: Abolish the Stealth Tax

The Stealth Tax is a scam based on a deal between local governments and the Texas Legislature. Appraisal districts every year assess property, determine its taxable value, and—in most years—raise that value up to a capped limit of 10 percent. When property value goes up, the tax goes up.

Nobody votes. The tax rate is unchanged. In fact, officeholders all over Texas brag to their constituents that they’ve “held the line on spending.” That brag is a lie.

The appraised value of homes in Texas increased more than 60 percent from 1996 to 2002. Local governments raked in $10.5 billion from the increase, and they did it without ever holding a vote. Has anybody—Dallas, DISD, Dallas County, Garland, Plano—announced a surplus? No. They spent the money. There was no line on spending. Instead, there was political camouflage. The appraisal district—run by an unelected board—did the dirty work for them.

Reform-minded Republicans, led by Harris County Tax Assessor Paul Bettencourt, intend to change that. They believe elected officials should be held accountable for taxes. If a local government needs more money, as I believe Dallas does, voters ought to be told so. If taxes need to be raised, elected officials should have to vote on it.

Republicans have controlled the Legislature for only two years. In their new majority, they are moving to reform how government is run. They are doing away with government behind closed doors and opening up shutters that have long been closed. One measure that will change how government does business is the proposal to eliminate the Stealth Tax. Here’s how it works:

First, the bill lowers the capped rate from 10 percent to 3 percent, which is a little higher than the cost of living. At present, workers in Texas are watching their homes being taxed at a faster rate than their incomes are going up. That’s a recipe for disaster.

If taxes need to go up, voters ought to be told why—and have the opportunity to vote for or against whoever raises them.

Second, the bill applies to residential properties only, leaving commercial properties to be taxed at market value.

Third, the bill sets market value and comparable value as the standard for appraisals. To do that, it requires that all property transactions be made public. The expensive and cumbersome appeals process that only rich property owners with lawyers and accountants can afford is eliminated.

This doesn’t change the tax rate. If the Dallas City Council wants to raise taxes to fill potholes, it can. If the Highland Park Town Council wants to raise taxes to buy BMWs for employees, it can.

So who’s against it? Local government organizations—the Municipal League, the Texas Association of Counties, the school districts—have hired lobbyists to fight any change. (Those lobbyists, by the way, are paid for with your tax money. So your tax money is being spent to keep the Legislature from cutting your taxes.) Fred Hill, an anti-reform Republican from Richardson and chair of the House Local Government Ways & Means Committee, so far has listened to the lobbyists more than he has listened to his party or his constituents. So have a few Republican state senators.

Gov. Rick Perry, to his credit, has taken up the banner of reform, and Lt. Gov. David Dewhurst—the leading government reformer in Texas in a generation—is pushing for change.

I believe in taxes, but I don’t believe in being anybody’s patsy. If my taxes need to be raised, I want to know why. I want debate. I want an open vote. And I want to know who voted for and who voted against.

It’s called representative democracy. And it’s time to restore it to Texas. —Wick Allison