Review Paper 3
Taxation System in Texas
Ad Valorem property tax is defined by Texas Politics Today as “a tax assessed according to value, such as the tax on real property and personal property”. The textbook further adds “most local government in Texas primarily tax real property”. Encyclopedia Britannica of Economic provides another view of Ad Valorem tax, as it is defined as “any tax imposed on the basis of the monetary value of the taxed item, physical units such as gallons, pounds or individual items.” In Texas and many other states nowadays, all citizens have to pay taxes for any kind of properties they own that categorized in the real property group, for example, buildings and lands. The Ad Valorem property tax is not a perfect taxation system. First, it is hard to establish a satisfactory value figure with this taxation program, especially in the case of tariffs. Secondly, this taxation system has been known to created many monetary “shortfall” within the states over last few decades. Perhaps because its distinctive feature that Ad Valorem incurred only through ownership of the properties, which limit the taxable sources, and the taxing rate of this system is not big enough it generate a sufficient amount of monetary. On the other hand, both state income taxes, which impose a fixed rate of taxable income of individuals, and other state transactional taxes (such as sale taxes), which incurred at the times of transactions, allow more frequent taxing and greater taxable sources, therefore generate a larger amount of income to the states’ budgets. The Ad Valorem, however, has an important advantage of adjusting the tax burden according to the amount the consumer spends on the taxed items. According to Texas Property Tax Laws, “the levy and assessment of an ad valorem tax at a rate not greater than 75 cents per $100 of assessed valuation of taxable property”. Thus, this taxation system allows citizen to “avoid the serious discrimination of the...
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