Equal and Uniform Taxation
By the Texas Association of Property Tax Professionals
There has been an avalanche of media stories reporting perceived problems with the constitutional requirement and current laws for equal and uniform taxation (E&U). As a result, two major organizations have emerged to debate this issue. Real Values for Texas (RVT) is a group made up of apparent political activists who seek to overturn current E&U laws and by doing so they seem to hope to generate increased tax revenues for local governments. The other is The Coalition for Equal and Uniform Taxation (CEUT), which is made up of commercial property owners and managers who argue that Texas businesses do in fact pay their fair share of taxes and more.
Let’s examine some facts as a backdrop to the question of “whether businesses pay their fair share of taxes?”
• First and foremost, Texas businesses pay the majority of all taxes in the State of Texas. On March 4, 2015 The Texas Taxpayers and Research Association published a report stating that 63.5 percent of all state and local taxes are paid by Texas businesses.
• Second, according to the Biennial Property Tax Report (2012 and 2013), average single family residential values increased 3.87 percent between 2012 and 2013. Commercial properties increased 8.48 percent.
• Third, according to the Comptroller’s 2014 Property Valuation Study Texas business taxpayers pay the majority of all Texas property taxes.
RVT and their supporters seem to understand the political reality is that they cannot overturn the constitutional right to equal and uniform taxation. Therefore, they propose changing the playing field so that the opportunity for taxpayers to obtain relief based on an E&U appeal of an assessment is rendered ineffective.
Currently, property tax law provides three alternatives to demonstrate inequality and obtain tax assessment relief. RVT seeks to cut that number down to two. Both would require appeals based on “ratio studies using “market value” to establish the median level of appraisal”. These two alternatives have been historically ineffective and apparently never used due to difficulty of application and the cost to the taxpayers.
Current law provides a third alternative based on “the median appraised values of a reasonable number of comparable properties appropriately adjusted”. This alternative provides a meaningful remedy that establishes an avenue for equity appeals for homeowners and commercial property alike. A taxpayer currently has the right to compare their valuation with those of other surrounding comparable properties. Further, the courts have consistently confirmed this option by stating, “If a conflict exists between taxation at market value and equal and uniform taxation, equal and uniform taxation must prevail.”
RVT and others also seem to believe that current law is creating unjustified litigation. However, based on the Comptroller publication “Taxpayer’s Rights and Remedies,” taxpayers have the right to appeal if they disagree with an appraisal review board ruling. It is true that in 2012 there were 6,914 lawsuits filed by taxpayers. This is a small number compared to the millions of parcels of property in Texas. However, it should be noted that all of these lawsuits were not exclusively based on E&U appeals. Additionally, it should also be noted that the overwhelming majority of these cases were settled out of court. For example, in 2012, only 31 cases went to trial. This is due in part because of current law allowing the award of attorney fees to a prevailing property owner. This effectively encourages the resolution of the vast majority of all cases. Further, the effect of all 2012 court resolutions resulted in a .00430564 percent reduction in Texas tax rolls.
Finally, it seems obvious that RVT and others for a variety of reasons have never liked the 1997 equity law which allows a protest based on a comparison between other like properties. The Texas Association of Property Tax Professionals does support the current E&U laws and believe a change such as that supported by RVT would result in a significant tax increase on all Texas taxpayers and a loss of an important constitutional right.