TAX LIMITATIONS TO REDUCE MUNICIPAL PROPERTY TAXES - TRUTH IN TAXATION IN TEXAS

Truth in taxation, or full disclosure, is a method to reduce revenue w indfalls following property reassessment. Its basic premise is that if taxpayers are fully informed of pending changes in their tax burden, increases will occur only after lawmakers have convinced them of the m erits of the spending proposals. The authors used data from 93 Texas c ities collected over a 12-year period to examine the effect of full di sclosure on real per household property tax burdens. They found that r eal per household tax burdens were unaffected in the years following i mplementation of full disclosure. One explanation is that the 8% rollb ack limit used in Texas may have given lawmakers a target on which to constrain tax increases. Another is that full disclosure may be workin g effectively in Texas. Once citizens understand the rationale for spe nding increases and have a sense of control over extraordinary rate in creases through the rollback option, they do not oppose upward adjustm ents in the tax rate.