Property Tax Caps—Legislation’s Unintended Winners and Losers

“I’m from the government, and I’m here to help.” — Ronald Reagan

In response to an outcry from the citizens of Texas that constantly rising taxes were creating a serious hardship for homeowners, particularly elderly or retired folks on fixed incomes, the Texas Legislature sought to remedy the problem by enacting laws to place a limit on how much a homesteaded property’s appraisal could be raised in any year. In its considered wisdom, the legislature, with the governor’s leadership, enacted a bill to limit any market value increase to 10 percent per year.

“Pay no attention to that man behind the curtain.” — The Wizard from The Wizard of Oz

It sounded like a good idea, but it had consequences that were not widely considered or discussed when the legislation was debated. Among the legislation’s unintended consequences was a windfall tax savings—not for the lowest income families but for the wealthiest of Texas homeowners. This was not the group of people that the legislation was advertised as benefiting, and when the wealthiest homeowners get the lion’s share of the benefits, the tax burden shifts to other types of properties and back to the lower-income families it was intended to help.

“A map is worth a thousand pictures.” — Paul Lauder

The Dallas Central Appraisal District (DCAD) sought to inform the legislature about how the capped value limits were affecting homeowners and show who the real beneficiaries of the legislation were. DCAD generated a series of GIS maps, using two-dimensional and three-dimensional ArcMap documents and color orthophotograph overlays and incorporating U.S. Census group block demographics and summary statistics from Crystal Reports. These maps demonstrated that the largest amount of tax savings was accruing to the wealthiest residential property owners, not the intended moderate- to low-income families. The three-dimensional map showing “Certified Value Lost” by neighborhood clearly shows the spatial location of the largest tax savings and places those savings in the prestigious Highland Park, Preston Hollow, and North Dallas areas. The lower-income minority population areas of Dallas County show significantly less tax savings for homeowners.

Dallas County, like many urban, heavily populated, and developed areas, is stratified by both income and race. Anyone, particularly the legislators, recognizes the map of Dallas County when displayed by income and household value. By preparing maps showing the location and the demographics of where the benefits were being enjoyed, it belied the argument that the legislation was helping low-income families hold on to their houses. A map is worth a thousand pictures in getting this point home to the legislators.