We have seen an explosion in growth in the Austin area over the last couple of years. With this growth property values have skyrocketed, making living in the area more expensive. In Austin, the current median home price is $575,000. In Pflugerville were my wife and I live the median value has risen to $445,680. Many residents have lived in their homes in the area for years and are on fixed income, and with rising property values are going be forced to leave their community. No one should have to worry about losing their home due to the government taxing them out of it.
In recent years there have been proposal for the elimination of property taxes. These proposals have a five-year transition period. Our neighbors can not wait five years. Currently if you have a homestead exemption on your home, your property value can be increase 10% annually. A family that purchased a home for 300K at the end of the transition period would see their property valued at 483K, which at our tax rate of 2.7% would equate to around $5,000 extra per year in property taxes. The home mortgage would cost a family $1,109, while the monthly tax burden for the home would be $1,086.75. The fact that a Texan must pay the same amount in taxes as their mortgage is unacceptable to me.
I will work tirelessly to see the elimination of property taxes for anyone who has a homestead exception on their property. The difference in lost state revenue from the elimination of the property tax will be made up by the introduction of a VAT (value added tax). The rate of the VAT will be locked in for five years. Every five years there will be an adjustment to the rate to meet the state revenue needs. Any property without a homestead exception will still be subject to current property taxes. We want to ensure that Texas collects taxes from out of state investors, those fortunate enough to have second homes, and rental properties. By only eliminating property taxes on families with homestead exceptions we should be able to keep the VAT rate down. We also want to ensure that essential items such as food, clothing and utilities are not subject to the VAT tax.
The American dream has always been to own a home. Removing property tax would make this dream a reality for more Texans. As mentioned above the median home price in Austin is 575K. A new homebuyer using an FHA loan with 5% down after taxes and fees would have an estimated monthly cost of $4,200. The average family household income currently in Austin is $71,000. The dream of owning a home in Austin is unattainable for so many. If we eliminate property taxes that same home would have a monthly cost of around $2,900. Opening the opportunity to many more families of owning a home.