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How Rising Property Taxes in Texas Impact Minorities First

October 14, 2022 | By Reef Merhi
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As property tax bills surge in Texas, many families are finding themselves pushed out of their homes and neighborhoods. The brunt of this increased financial burden is falling on minority families and homeowners at a time when they can least afford it.

Despite being the fastest-growing population in the state, minorities are disproportionately affected by rising property taxes. This issue demands our attention, and we need to find solutions that will help keep families in their homes.

The Need for Property Tax Revenue in Texas 

All levels of government in Texas rely on property taxes to fund public services. School districts, cities, counties, and other local entities use these taxes to pay for everything from police and firefighters to road maintenance and parks. Texas has the 6th highest property taxes in the country.

The state of Texas does not have a personal income tax, so property taxes are a major source of revenue for the state budget as well. In fact, Texas is one of only seven states that do not have a state income tax. Thus, unlike states with robust income taxes, property taxes are hugely important to the local economy.

In 2021, Texans paid an estimated $73.2 billion in property taxes. These funds went to school districts, cities, and counties to fund everything from public schools and police departments to road maintenance.

Changes in Texas Property Tax Rates

Over the past few years, property taxes in Texas have been on the rise. In 2016, the average effective property tax rate was 2.06%, up from 1.98% in 2015. This may not seem like much of an increase, but it comes at a time when home values are also increasing rapidly.

According to the Texas Association of Realtors, the median home price in Texas increased by 18.6% in the first quarter of 2022 as compared to the previous year. This means that the average homeowner is paying more in property taxes even if their tax rate remains the same.

Home values in 2022 have taken a huge jump. Residential appraisals are up 15% to 30% in Harris County, 20% in Tarrant County, 24% in Dallas County, 25% in Bexar County, and a whopping 53% in Travis County.

Surging Home Values Lead to Unfair Property Taxes

The combination of rising property taxes and home values is putting a strain on homeowners, especially those who live on a fixed income or who are struggling to make ends meet. A recent report from the National Low Income Housing Coalition found that a family earning the median income in Texas would need to spend nearly 60% of their income just to afford a modest two-bedroom apartment.

For many families, this leaves little room for other essentials like food, transportation, and child care. And for those on the cusp, rising taxes could be what it takes to push them out of their homes. Statistically, Hispanic and Black families are the likeliest to feel this pinch.

How Higher Property Tax Bills are Pushing Minorities Out of Their Homes

Low-income families who are already struggling to make ends meet are the ones being hit the hardest by rising property taxes. A study from the National Community Reinvestment Coalition found that minorities are more likely to live in areas with high property taxes.

This is due, in part, to the fact that minorities are more likely to own homes in low-income neighborhoods where home values have not kept pace with those in wealthier areas. However, their appraised values for tax purposes often remain high. Thus, property taxes paid by these homeowners is disproportionate to that of wealthier neighbors.

In fact, a nationwide analysis from the University of Chicago revealed that inequities in tax assessments are both very large and very common. The common finding? More expensive properties are undervalued, while less expensive properties are overvalued. Meaning lower-income homeowners, often minorities, end up paying the brunt of the taxes.

The Response from State and Local Governments to Address Inequalities

Local governments in Texas are starting to take action to address the inequalities caused by rising property taxes. In 2017, the Legislature passed a law that requires school districts to give homeowners a tax break if their property taxes increase by more than 8%.

The assessed value of a home is an estimation based on the appraisal district’s educated guess of the value of the home. It’s not set in stone, and residents even have the right to challenge the estimated appraised valuation.

Additionally, because Texas law limits how much of the newly assessed value of a property can be taxed, any property tax increase will depend in large part on what various local governments do when they finalize their annual budgets and set the tax rates for the revenue they need to operate.

This process could help to ease the financial burden on families, but more needs to be done to ensure that all Texans can afford to stay in their homes. As property taxes continue to rise, we need to find solutions that will help keep families in their homes. We must work together to make sure that everyone has a place to call home.

Takeaways on Rising Property Taxes

Property taxes are a necessary evil. We all know that they are the price we pay to live in a civilized society and that they fund our schools, roads, and other important public services.

However, there is something fundamentally wrong when property taxes disproportionately impact minorities. This is the reality in Texas right now, where surging home values are pushing many low-income and minority homeowners out of their homes.

 

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