A Texas-Sized Commercial Property Tax Gambit

An article by Matthew Watkins explains Texas' property tax system and the imbalanced tax burden it creates for homeowners relative to commercial property owners.

"The Texas Constitution provides two ways for property owners to make their case [in reducing their taxable values]. Homeowners usually cite market value, claiming they couldn’t sell their houses for the amount the appraisal district claims they are worth."

Commercial property owners, however, "usually prefer another tactic, Nolan said. They argue that they aren’t being taxed 'equally and uniformly.' That essentially means a property owner thinks his peers — the owners of other multimillion-dollar buildings — got valuations much lower than his. If so, that’s a violation of the owner’s rights under the state constitution."

Since that system was enacted in 1998, challenges to appraisals of commercial property value in Texas have skyrocketed. In 2013, in Dallas County alone, commercial property owners reduced their initial appraised value by more than $4.8 billion. "That’s more than seven times the reduction secured by residential property owners," explains Watkins.

Resistance to the system is growing, including demonstrations in San Antonio in April and threats of legal action in Harris County, where commissioners "threatened to sue the local appraisal district after a shopping center sold for nearly $200 million more than its appraised value…" Steve Blow followed the article by Watkins with an editorial calling for the state to make the property tax appraisal system fair for all Texans. He cites the work of advocacy group Real Values for Texas in achieving that goal. Blow's case: "If we must pay taxes, we at least want them to be fair. And in Texas, that’s less and less the case."