Tax limitations to reduce municipal property taxes: Truth in taxation in Texas

Truth in taxation, or full disclosure, is a method to reduce revenue windfalls 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 merits of the spending proposals. The authors used data from 93 Texas cities collected over a 12-year period to examine the effect of full disclosure on real per household property tax burdens. They found that real per household tax burdens were unaffected in the years following implementation of full disclosure. One explanation is that the 8% rollback limit used in Texas may have given lawmakers a target on which to constrain tax increases. Another is that full disclosure may be working effectively in Texas. Once citizens understand the rationale for spending increases and have a sense of control over extraordinary rate increases through the rollback option, they do not oppose upward adjustments in the tax rate.