A Case for Equity within the Texas Property Tax System

Preface: Similar properties should be valued similarly to ensure equal treatment among taxpayers. In essence, so long as a taxpayer may rely on an equal and uniform argument, the taxpayer is able to address and minimize any possible unfair treatment against their property by an appraisal district.

The law: The Texas Constitution gives taxpayers have the right to equal and uniform taxation. The Courts and Texas Property Tax
Code have established that taxpayers have the right to their property is appraised uniformly with similar property within their county. The Courts have gone so far as to say that a taxpayer are entitle to the lesser of market value of or unequal appraisal value.

Equity Prevents Sales Chasing: Prior to having the right to protest an unequal appraisal taxpayers suffered the results of so-called
“sales chasing “by appraisal districts, which meant that the last property to sale would be assessed higher than surrounding properties which did not change hands. Sales chasing is more akin to the manner in which California administers their property tax system.

Why Are Unequal Appraisal Protest ncreasing: Recently the media has portrayed property owners protesting valuations using unequal appraisal as taking advantage of “a loop hole” in our tax system to lower their taxes at the expense of other taxpayers who do not choose this method.

Example: This Fall the Texas Apartment Association printed this in an article in their trade publication to their membership:

Multifamily property
2011 initial value $22.2 million
2011value after protest $19.5 million 14 percent decrease from initial 2011 value
2012 initial value $24.5 million 25 percent increase from final 2011 value
2012 value after protest $20.5 million 16 percent decrease from initial 2012 value
2013 initial value $28.4 million 40 percent increase from final 2012 value

The Source of The Problem: The appraisal review board is the last stop for a protesting taxpayer in the appeal process.If a taxpayer is denied relief from a market value or unequal appraisal generally litigation is the next step. Therefore a fair and unbiased appraisal review board (ARB) hearing can settle disputes or just punt it to the next level. The Legislature has heard from the public many times
that ARB hearings have historically not been fair. Thus The Legislature has consistently over the last several sessions made chances to our property tax system to ensure taxpayers are afforded fair and unbiased appeals and hearings. During the 2013 Session the Legislature yet again passed another piece of legislation to improve Texas Appraisal Review Boards (ARBs). Specially HB 585 which among other things sought to improve ARBs by improving independent training of ARB members, created State ARB model of procedures and hearings, ARB members with a population 120,000 or more will have their ARB members selected by and The County Administrative Judge. Hopefully these changes will help insure fair and unbiased hearings for Texas taxpayers.

How Others View Our Tax System: Texas prides itself on having a pro-grow tax policy. The Texas economy is the envy of the nation.
Time Magazine not known for its conservatism had a cover story recently which stated that Texas was a model for the rest of the country going forward into to the future. Time listed 10 reasons for why Texas is a model for the rest of the country and stated that “…Texas has no income tax. Per resident, it collects roughly
$3,500.00 in taxes overall (including all state and local taxes) every year. By contrast, California collects $4,900.00 per resident-New York collects a whopping $7,400.00 per resident…”