The state’s leading conservative think tank has proposed a solution to abolish the unpopular wealth-redistribution program that’s plagued Texans since 1994. If enacted, the average Texan could eventually see a 40-percent reduction in their property tax bill.
In 2018, Texans paid $2.1 billion in property taxes into the state’s Chapter 41 Wealth Equalization program—also know as “Robin Hood.” The unpopular scheme forces property owners in certain districts to pay more in school taxes than what’s needed to fund their local schools.
Why was Robin Hood created? The short answer: To equalize property tax collections between “property poor” and “property rich” areas.
Every school district levies similar school property tax rates for their operating budget, from $1.04 per $100 of valuation to $1.17. But the property wealth (both residential and commercial) varies dramatically between some school districts.
In other words, the amount of tax revenue generated by a given tax rate in Austin ISD is much higher than the same tax rate levied by La Joya ISD.
To help balance out disparities, the state “recaptures” property tax revenue above a certain amount from “rich” areas such as Austin, and uses it to fund public schools in relatively “poor” areas such as South Texas.
If state lawmakers were to repeal Robin Hood, taxpayers in recapture districts could pay far less in school taxes without cutting funding to local schools. However, the state would need to find billions in revenue elsewhere to offset the taxes collected by the Chapter 41 program. In 2018, the cumulative figure statewide was more than $2.1 billion.
The Texas Public Policy Foundation recently released a report with a solution. If state lawmakers cap the state’s budget growth at four percent per year – and dedicate 90 percent of the surplus to lowering school property taxes – the Robin Hood tax could be phased out in 10 years. By the 11th year, the entire school property tax for maintenance and operations (M&O) could be abolished, reducing the average Texan’s total property tax bill by 40 percent or more.
If lawmakers passed a spending limit of five, six, or even seven percent, less surplus would be available each year for tax relief, and would take longer to phase out Robin Hood and the school tax.
But TPPF’s proposal is the only practical plan to repeal Robin Hood completely, reduce the property taxes paid by Texans over time, and repeal a large portion of the property tax system.
To find a year-by-year breakdown of how much property owners in each school district have paid in Robin Hood taxes since 1994, click HERE.