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State lawmakers should repeal the property tax levied on business personal property and inventory. Only eleven states other than Texas levy such a tax.

Texas’ onerous property tax system requires that businesses pay taxes on both the land it occupies and its assets—including the inventory it uses to generate revenue. Business “tangible” personal property is defined as:

“[A]ll tangible personal property used by commercial and industrial businesses to produce income, including fixtures, equipment, and inventory.”

Taxing business in this manner is somewhat analogous to taxing families on their couch, computer, refrigerator, phone, or car. Frankly, if you used your dog to generate income, you’d pay property taxes on that too.

Taxing assets and inventory saddles small businesses and startups, punishing them even when they lose money or fail to generate positive cash flow. It also makes Texas less attractive to manufacturing, technology, and capital-intensive business investment.

Lawmakers in both parties have foolishly created taxpayer-handout programs in an attempt to “stimulate” business growth. In fact, in many ways, corporate handouts to big business have accelerated since Republicans gained control. At the behest of government-interest groups and crony chambers of commerce, lawmakers also created new taxing schemes for local governments under the guise of “economic development.”

The policy focus should alternatively be on lowering and repealing taxes altogether – such as the franchise and business personal property taxes – which would create a more attractive and equitable economic environment.

After all, a tax system that requires political influence for special tax treatment only benefits those in power, not the average taxpayer. It also breeds corruption.

In addition to the property taxes levied on real estate, business-personal property and inventory, thirteen separate categories of property are subject to taxation. Many of these account for a frivolous portion of the tax base and could likely be eliminated altogether, providing that local governments are prohibited from raising taxes on everyone else to make up the difference.

Instead of giving tax-funded handouts and special exemptions to companies with political influence, Texas should reverse its bad habits by repealing various taxes.

Texas could start by joining thirty-eight other states and repealing the oppresive business personal property tax.

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