As everyone gets their tax bills knows, the city of Waxahachie has increased property taxes by 42% over just the last four years, while population has grown on average 3.5% a year. The city has also expanded the general fund budget by a similar amount, primarily by adding something like 50 new employees over the last two years, many in administrative positions. Our City Council has never provided us with any explanation or justification for these new positions or for the large increases in our property taxes. I personally have asked them on several occasions in public meetings to justify this large increase in taxes and spending, but have never received any response at all other then expressed disdain on my speaking up.
As I walk around the city meeting people, I was informed by two different individuals that the wealthy land developers in Waxahachie prefer this high taxing and spending approach to city government. Both of these individuals are in a position to know. I am told that the developers believe that the more the city spends and the more employees the city has, that the higher will be the value of their development properties and they can therefore make more money. I also hear similar comments from people on the social networking site NextDoor. These comments go something like “higher city spending and higher taxes make our city prettier and will attract more businesses to our city”.
From my viewpoint most of this increase in city spending is wasteful. It is apparent to me when I sit in on City Council meetings that the city is spending money and increasing its payroll in any way that they possibly can to spend the high tax increases. One reason I say this is because when you look at the service levels in the city from city services they are already very good or excellent. Adding more staff doesn’t make service levels any more excellent. Another reason that I say this is that when these positions are approved by City Council there is never any discussion as to the potential impact on service level or any discussion on what benefit may result from adding the positions, or any justification at all for that matter.
Let me dispel this myth that high property taxes are good for businesses. Just the opposite is true. Here are some reasons:
1. When it comes to property values, a knowledgeable purchaser would consider the cost of maintaining the property in the purchase decision and in the price that they would be willing to pay. High property taxes results in higher cost and applies downward pressure on demand for property making properties less valuable, not more valuable.
2. High property taxes hurt businesses through higher rents. Rents are higher because costs are higher. Businesses thereby suffer through lower profits making them less likely to locate to higher tax areas. Businesses suffer again because their prices must be higher to recoup the cost of the higher rent. Higher prices then result in lower levels of sales, making economies of scale harder to achieve, and results in overall lower economic activity and employment.
3. High property taxes result in more poverty and homelessness. More and more people are forced out of their homes as taxes continue to rise. This is what the local homelessness coalition in Waxahachie said in this newspaper: “Ellis County has a growing population of homeless that is caused by the increasingly high rents. I am hearing stories of some who claim their property taxes are reaching rates that they used to pay for their mortgage. Along with high rents, job loss and health issues play a big part in homelessness.” More homelessness and other social problems caused by high property taxes dissuade businesses from moving to an area.
4. High property taxes also provide an incentive for homeowners to let their homes run down. They do this to get lower property assessments and avoid high property taxes. High property taxes also provide a disincentive for people to upgrade their homes. Our city thereby continually runs down as taxes become higher and higher.
Businesses come here because there is a need for them that they can fill and thereby earn profit, or in some cases because there is a pool of people here that they need to fulfill the execution of their business (such as manufacturing and distribution businesses). High property taxes only make it more costly for potential employees to live here and harder for businesses to succeed.
Our city is awash in money and spending it in any way it can. One only needs to look at high property tax jurisdictions to see the harm that high property taxes and inefficient city government causes on wealth in a city, on the harm it causes to businesses, and the harm that it causes to its citizens.