Rice experts to testify on property tax at Texas Senate hearing in Houston area

MEDIA ADVISORY

David Ruth
713-348-6327
david@rice.edu

Rice experts to testify on property tax at Texas Senate hearing in Houston area

HOUSTON — (Nov. 27, 2018) — Tax experts Jennifer Rabb and John Diamond from Rice University’s Baker Institute for Public Policy will provide testimony and take questions before the Texas Senate Select Committee on Property Tax Reform at 10 a.m. Nov. 28 at Lone Star College-Montgomery Campus in Conroe.

The committee is studying whether property taxes – especially those that pay for operating and maintaining schools — can be replaced with revenue from sales taxes or other consumption taxes. It will also evaluate whether some local property taxes are more likely to lend themselves to such a tax swap, study the economic effects of a swap, identify a target property tax rate and evaluate how to reach that target with a consumption tax.

The committee will also evaluate calculations of effective tax rates and rollback tax rates, then identify what changes could produce a better rollback process. The committee also plans to evaluate whether the current rollback election trigger serves modern objectives.

Appraisal review boards (ARBs) will also come under the committee’s scrutiny. It will study whether board members have sufficient training and expertise on appraisal standards, law, ethics, and meeting procedures. It will also determine whether ARB operations are sufficiently independent of central appraisal districts and taxing units and whether ARBs and chief appraisers should be elected.

Rabb, who is the director and fellow of the McNair Center for Entrepreneurship and Economic Growth and previously served as a tax policy advisor in the Office of the Lieutenant Governor of Texas, will testify about the usefulness of the effective tax rate as a red flag for property tax increases. The effective tax rate was added to state law in 1978 and 1979 as a tool to inform taxpayers of proposed property tax increases, but whether it has lived up to expectations is questionable. Her testimony will explore whether the effective tax rate is so technical it is impractical, and whether taxpayers today even know about it. She will make recommendations for a more meaningful benchmark for tax increases that can be communicated in ways that were not possible when the effective tax rate was added.

Diamond, who is the Edward A. and Hermena Hancock Kelly Fellow in Public Finance, will discuss the feasibility of replacing the school maintenance and operations (M&O) portion of the property tax with sales tax or other consumption tax revenue, and to quantify the short-term and long-term economic effects of such a tax swap. In addition, he will discuss the change in the sales tax rate that is needed to replace the school M&O portion of the property tax.

For more information on the committee, visit its website.

For more information on Rabb or Diamond or to schedule an interview, contact David Ruth, director of national media relations at Rice, at 713-348-6327 or david@rice.edu.

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Located on a 300-acre forested campus in Houston, Rice University is consistently ranked among the nation’s top 20 universities by U.S. News & World Report. Rice has highly respected schools of Architecture, Business, Continuing Studies, Engineering, Humanities, Music, Natural Sciences and Social Sciences and is home to the Baker Institute for Public Policy. With 3,962 undergraduates and 3,027 graduate students, Rice’s undergraduate student-to-faculty ratio is just under 6-to-1. Its residential college system builds close-knit communities and lifelong friendships, just one reason why Rice is ranked No. 1 for lots of race/class interaction and No. 2 for quality of life by the Princeton Review. Rice is also rated as a best value among private universities by Kiplinger’s Personal Finance. To read “What they’re saying about Rice,” go to http://tinyurl.com/RiceUniversityoverview.