Of the ten constitutional amendments Texas voters will approve or reject in November, three ballot initiatives relate to taxes.
Proposition 4, the most widely publicized ballot initiative, if approved, would amend the state constitution to prohibit “the imposition of an individual income tax, including a tax on an individual’s share of partnership and unincorporated association income."
Texas is one of seven states that levies no personal income tax. But the state constitution allows for the option for the state to enact a tax on individuals if voters approve it through a statewide referendum.
Proposition 4 eliminates the referendum option.
A two-thirds vote in both chambers of the state Legislature is required to add a constitutional amendment to the ballot for voter consideration. In 2019, a minimum of 121 votes was required. Proposition 4 received 122 votes, the narrowest margin of approval for a constitutional amendment initiative in more than two decades.
Only 29 percent of legislative Democrats joined Republicans to vote for it.
Two other constitutional amendments on the ballot, Proposition 3 and 9, also address tax policy.
Proposition 3 would authorize the legislature “to provide for a temporary exemption from ad valorem taxation of a portion of the appraised value of certain property damaged by a disaster.”
Local governments have the legal authority to reappraise property values located within a governor-declared disaster area and property damaged by disasters. The constitutional amendment would allow the state legislature to authorize local governments to also provide tax exemptions for these properties.
If voters approve the measure, a bill passed by the Legislature, HB 492, would become effective Jan. 1, 2020.
HB 492 provides rules governing the terms for local governments to assess exemption status, including the types of eligible properties and exemption rates. It specifies damage rating levels of 1 to 4, calculating tax exemption amounts for assessed percentage of damages. Eligible properties include houses used as dwellings, improvements to real property, and tangible personal property used to produce income.
Voting against the amendment would not change the property reappraisal process, it would just not allow for the tax exemption status.
Three House Republicans authored the bill, Rep. Hugh Shine, R-Temple, Rep. Drew Darby, R-San Angelo, and Rep. Phil Stephenson, R-Fort Bend.
Republican Gov. Greg Abbott signed the bill into law, and if approved by voters, it also will go into effect Jan. 1.
Proposition 9 allows the Legislature to exempt precious metals held in precious metal depositories from property taxation. Opposing the measure enables the state to continue to tax them.
Voting for Proposition 9 would also enact legislation passed this session, HB 2859, which exempts precious metal held in precious metal depositories from property taxation. The bill defines precious metals as a metal, "including gold, silver, platinum, palladium, and rhodium," that "bears a high value-to-weight ratio" and "customarily is formed into bullion or specie." Precious metal depositories that store precious metals often charge a fee based on the value of the stored metals and provide security and insurance.
To date, local governments have the authority to exempt tangible personal property that is not used to produce income from property taxation, but they are not required by law to do so. As a result, they can and do levy property taxes on precious metals held in depositories. The amendment, if approved by voters, would end this practice.
Rep. Giovanni Capriglione, R-Tarrant County, and Sen. Pat Fallon , R-Frisco, sponsored the amendment.