Proposition 4
“The constitutional amendment to authorize the legislature to establish a temporary limit on the maximum appraised value of real property other than a residence homestead for ad valorem tax purposes; to increase the amount of the exemption from ad valorem taxation by a school district applicable to residence homesteads from $40,000 to $100,000; to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in certain exemption amounts; to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations; and to authorize the legislature to provide for a four-year term of office for a member of the board of directors of certain appraisal districts.”
If voters approve Proposition 4, it would lower property taxes by:
- increasing the homestead exemption — the amount not taxed by local school districts — from $40,000 to $100,000 for the primary residence of property owners
- Limiting increases on appraised values on non-homestead properties – business properties or second homes – more than 20% over prior year’s appraised value
- Non-homestead properties valued at $5 million or less, will qualify
- The non-homestead property tax limit expires December 31, 2026
- Allowing money to be sent without going towards the spending limits listed in the constitution.
- The Legislature “approved sending money to school districts to replace lost tax revenues.”
- The Legislature requiring counties with a population at or over 75,000 to have three of nine members of local appraisal boards to be elected.
- Members are appointed, currently.
SUPPORTING VIEWPOINT
Dawn McVea
Senior State Director
National Federation of Independent Business
Q: What are the main takeaways the average Texan should understand about this proposition?
A: Prop 4 is a $18 billion tax cut. It will lower residential property taxes by increasing the homestead exemption from $40,000 to $100,000, lower business taxes by raising the revenue threshold for franchise taxes and create greater transparency in the property appraisal process.
Q: Why should the average Texan care about this proposition?
A: The state experienced a Texas-sized surplus of $32 billion. That means Texans overpaid in taxes what it costs to run state government. Surplus dollars belong to taxpayers. So, this is one way the state is returning tax dollars, in the form of this $18 billion tax cut, so the average Texan should care about that. Tax cuts like this put money back into your wallet and allow those dollars to be recycled back into the economy and generate additional revenue to run the government and support local economies.
Q: Why does your organization support Proposition 4?
A: 97% of our small business owners surveyed support Prop 4 because they realize it will do a few things. First, it will rein in sky-high property taxes. Texas is ranked sixth in the nation for highest property taxes. That is not a good thing for a state that is supposed to be business-friendly. So, the hope is that this will improve following the passage of Prop 4.
Second, it expands the exemption for businesses that pay franchise tax so that businesses grossing $2.47 million or less will be exempt from filing paperwork associated with and paying any franchise tax. This component alone will save time and money for small business owners. And, when that happens, they reinvest in their businesses by creating jobs, expanding the business or providing more opportunities for employees.
Finally, increasing the homestead exemption helps small business owners because … more often than not, they are Texas residents who own residential and/or commercial property. This will create tax savings for homeowners, which results in spending that goes back into the local and state economy. All around, Prop 4 is a win-win for Texans, business owners and the local and state economy.
– This Q&A was edited for clarity. Interview conducted by Angelina Cuevas, Alizaha Gonzales, Kat Kotchey
OPPOSING VIEWPOINT
Jalen McKee-Rodriguez
San Antonio City Councilman, District 2
McKee-Rodriguez said he opposes Proposition 4 because it puts public education funding in “jeopardy,” by “using a budget surplus as means to provide temporary tax relief.” McKee-Rodriguez added that the tax relief would not go to those struggling the most.
– Information compiled by Alberto Torres
