Momentum - Business to Business Online Magazine MOMENTUM November 2018 | Page 15

Taxing Matters By: Cheryl E. Johnson, PCC Galveston Co. Tax Assessor Collector [email protected] Has SCOTX Decision Opened Door to Reform? The Texas Supreme Court may have opened the door to major property tax reform. buyer and willing seller agree on – putting the property owner in control. March 2, 2018, Texas’ highest court ruled in favor of Petitioners ending a three-year tax battle (No. 15-0683 EXLP Leasing, LLC and EES Leasing, LLC v. Galveston Central Appraisal District). As a taxpayer advocate, I was pleased for the property owners. As a diehard, 25-year advocate for reform of what I perceive to be an unfair, regressive tax system, I was excited after reading the Court’s decision. Nothing can stop an idea whose time has come and with this decision by our highest Court, a door of opportunity stands wide open. Using this decision, will our legislators finally deliver a tax system that will provide tax certainty yet provide local governments a stable revenue source? I surely hope so! In a nutshell, the SCOTX conveys that the Constitution does not bind “…the legislature to tax only on market value…” In fact, it clearly affirms that the legislature is “… free to adopt the mode of ascertaining the value of any class of property by such method as it might deem best… not tethered to an extra-textual valuation methodology that would dictate a particular outcome…” Apparently this decision has created a ripple among county appraisal districts (CADs) dreading the possibility some legislators may, at long last, implement meaningful reform of our imperfect and unfair tax system waving this decision like a banner. Worse for those devil CADs responsible for the annual increase in our tax bill, the vast majority of Texans will passionately embrace the maverick legislators who dare to do so! CADs, under current law, must appraise at market value but the Texas Constitution only requires taxation to be “equal and uniform” and property to be taxed “in proportion to its value.” How that value is determined clearly lies in the hands of the legislature. No more excuses (e.g. it will take a two-thirds vote of both houses to amend the Constitution). Barring House and Senate self-adopted rules to the contrary, current law could be changed by a simple majority (17 in the Senate and 76 in the House). The Texas Public Policy Foundation has long stated there are two major problem areas in the Texas Tax Code - the margin tax and the property tax and that the state’s property tax system is the most punitive in the nation, punishing both homeowners and businesses. According to the Honorable Talmadge Heflin, Director of the Foundation’s Center for Public Policy, “Our research clearly indicates that substantive reforms in these two areas are needed in order to keep Texas’ economy thriving and competitive.” Key dates for the coming Legislative Session are included at left. Next month I will present my proposed tax reforms (all drafted and ready to be filed.) Can’t wait? Email me at [email protected] It is my long-held belief that taxes – minimally our homes - should be based on the price you paid – not a CAD manufactured value derived from sales in its defined neighborhood of properties. Enough of taxation of our unrealized capital gains – the touchy feely what our property MAY be worth. We need a progressive tax that acknowledges a property is truly only worth what a willing MOMENTUM / November 2018 14