Senate backs tax swap

Dallas Morning News | Terrence Stutz:

“Texas cities and counties would each be able to increase their sales tax rates one-fourth cent to reduce property taxes under legislation passed by the Senate on Friday – the first bill of the 2007 session that aims to offer relief from soaring property taxes.”

Ed Cognoski responds:

Everyone seems happy that property tax relief is in sight. No one seems to be paying enough attention to sales tax burden that is about to hit. This bill doesn't lower overall taxes one bit. It only shifts the tax burden from property taxes to sales taxes. Any such shift has winners and losers. The winners are the property rich. The losers are the property poor. Sales taxes tend to be regressive; the poor are hit harder than the rich. Property taxes tend to be progressive; the rich are hit harder than the poor. Property taxes are very visible. Each year, you receive a (big) tax bill that hurts to pay. Sales taxes nibble away at you, a little at a time, each hit too small to notice, but the cumulative effect can more than offset any property tax relief that the poor and middle-class will receive from a tax shift.

In short, be careful of the tax relief you ask for, you just might get it.