The only way to get rid of the property taxes, Abbott says, is to raise revenue elsewhere, and the only other place is the sales tax. We already have the 14th-highest sales tax rate in the nation, and now Abbott wants to make us number one.
Imagine you go to a semi-nice restaurant for dinner, and the bill totals $100. Add 30% sales tax, and the total is now $130. They are certainly going to add gratuity, which will be a minimum of 15%. Now, your lunch will cost you $145.
That TV you have been saving up for now costs $2000. Add a 30% sales tax, and you will get to take it home for $2600.
How many of you started using Amazon because, at the beginning, they were not collecting a sales tax? Those who were doing that saved thousands of dollars.
I live at the edge of Houston, and it is very easy to shop outside the city limits and save money on sales tax. I almost always shop outside the city, as it has saved me thousands of dollars by avoiding the metro tax that John Whitmire wants to use to take money from Metro to pay for Houston.
So we put that idea, replacing all property tax revenue, to the test at the Baker Institute for Public Policy’s Center for Tax and Budget Policy and examined how much the sales tax rate would have to increase to replace the current property tax revenue. The results are dramatic.
Local governments in Texas collected $82 billion in property tax revenue in 2023. In order to replace that revenue, our calculations indicate that the state sales tax rate would need to be raised to 22%. Texas’ sales tax rate is currently at 6.25%, and local entities can increase it to 8.25%.
Texas already has the 14th highest sales tax rate in the country. Louisiana has the highest sales tax rate in the country at 10.11%. So a 22% rate would be almost triple the national average and more than double the highest rate currently imposed.