There is no such thing as a good tax because all taxes take money from the people and give it to the government. However some taxes are necessary and only a few taxes adhere to the principles of sound taxation. These principles include: adequacy, transparency, efficiency, and simplicity. In Texas, there are several taxes which violate these principles.
Texas’ tax system is one of the best in the country, but that’s not saying much in this age of government gone wild and the rise of the TEA Party. Even though the tax burden in Texas is not as big as some other states, there is a lot of room for improvement. One avenue for major tax reform in Texas is to repeal the property tax and replace it with a more broad-based sales tax or consumption tax. Property tax is not transparent, efficient, or simple. Property tax requires an ongoing process of imagined appraisal and it is narrowly based, only taxing those who own property. Property tax also diverts government resources towards administration and compliance which is neither efficient nor simple. The main argument against property taxes, though, is that they prohibit true property ownership. If a person refuses to pay their property taxes, the state of Texas can confiscate their property so we are essentially paying rent to the state of Texas. I say if we cannot even own our property which we have worked hard to pay for, then we are not truly free. Property taxes should be repealed in Texas.
OK, so let’s say we are victorious in eliminating property taxes…how do we make up for the lost revenue? There are several ways which have been proposed, but the best method would be to reform the state consumption tax or sales tax. If we just eliminate property taxes, then the current sales tax base would not produce enough revenue and the rate would have to increase to 14.5%, but if we broaden the sales tax base to include a one-time tax on property at the point of sale, tax all services that are currently taxed in at least one state, and increase the tax base to include the total value of goods and services in the Texas economy, then the sales tax rate would drop to 6.5%. The tax burden would be spread out evenly, not just on property owners. Poor people would automatically pay less because they consume less and wealthy people would pay more because they consume more. There would be little need for administration or compliance personnel, saving the taxpayers even more money, and the people of Texas would actually get to own their property. What’s not to like?
Nobody can deny that the use of tobacco is unhealthy, but it is not the place of government to tax us into good health. Would we allow the government to levy unusually high taxes on fast food, or soda, or candy? Would we allow them to tax tanning beds? All of these are unhealthy, but the idea of taxing them at abnormally high rates is ridiculous to most people. The tobacco tax is just another targeted tax which accomplishes little more than filling government coffers. I want to eliminate it.
Standard Presumptive Value Tax
Very few people even know this tax exists or what it is, but when the time comes for you to pay it, this tax has the potential to make your head spin. Let’s say that you have a used car you want to sell and your close friend happens to be looking for a used car to purchase. After walking around the car and kicking the tires, your friend says he wants to buy your car and he asks how much you want for it. You think for a few seconds, and although the bluebook value of the car is around $3300, you consider the years of friendship you’ve shared and decide to sell the car to your friend for $300. You’re friend is flabbergasted and he tries to talk you up, but you are firm on your price and the deal is closed with a handshake. The next day, your friend brings you $300 cash and you give him the title and a receipt. Your friend then goes down to the county tax office with title in hand to have the car registered in his name. The clerk asks him how much he paid for the car and he presents his receipt and proudly exclaims, “300 bucks!” The clerk smiles and says, “Well, you owe us $233.00.” Your friend’s jaw drops and he asks “Why so much?” The clerk says “$68 for the registration fee and $165 for the tax.”
What your friend didn’t realize is that Texas enacted a Standard Presumptive Value Tax in 2006 which taxes the greater of the purchase price or 80% of bluebook. This tax was meant to counteract those people who lie about how much they paid for their used vehicles in order to dodge some of the sales tax. However, the bill punishes everybody instead of weeding out the ones who cheat. Not only that, but the law fails to take into account that bluebook values cannot keep up with market conditions like what we are experiencing now. Take the same example above and say that you lost your job months ago and are just trying to put food on the table, not to mention trying not to lose your house. When you try to sell your car for quick cash, all you can get is $300. In both scenarios the buyer is telling the truth about what he paid, and in both scenarios he gets robbed by the county tax office. But wait, this brilliant law provides a way for you to protest the assessment of your sales tax liability. You can pay an appraiser between $100 and $300 to appraise the vehicle to “prove” you’re not lying about the purchase price. It doesn’t take a genius to see that doesn’t address the problem of unfair taxation. The appraiser will come up with a value higher than the purchase price, because the buyer obviously got a deal. Lawmakers voted in this this bill and figured it would be good way to gain more revenue for the state. I think it is a backdoor dishonest way to take people’s money. I plan to introduce a bill to repeal the SPV tax and allow buyers of used vehicles to pay tax only on the purchase price.
Taxes can be fair and they can be honest. We just need fair and honest legislators to enact them.
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