The Action Plan: How Texas Ends Property Taxes
The Action Plan: How Texas Ends Property Taxes
A Step-by-Step Implementation Timeline — What Happens, When It Happens, and Why It Works
Why an Action Plan Matters
The first article in this series, We Can End Property Taxes in Texas, laid out the math: a 5% flat-rate consumption tax on Texas's $3.47 trillion gross sales base generates $173.4 billion in annual revenue—more than enough to replace every dollar currently collected through property taxes, the franchise tax, and the existing state sales tax, with a $30.6 billion surplus (21.4% buffer) left over. The second article, Home Rule, Property Taxes, and the Sales Tax Solution, explained the constitutional path: how Texas's home rule framework, combined with a targeted constitutional amendment, makes this transition legally sound.
This third article answers the most important question of all: How, exactly, do we do it?
The answer begins with a critical insight that most people miss. The majority of this plan is statutory—meaning the Texas Legislature can pass it with a simple majority vote, and the Governor can sign it into law. The franchise tax repeal, the sales tax restructuring, the exemption repeal, the revenue distribution framework, the school funding formula revision—all of these are ordinary legislation. Only the final prohibition on property tax levies requires a constitutional amendment. And that amendment can be on the ballot the same year the statutory reforms take effect.
Too many reform proposals die because they look impossible on paper. People hear "end property taxes" and assume it requires decades of political battles, complicated phase-outs, and some kind of magic no one has figured out yet. That is wrong. The mechanics are straightforward. The legal vehicles already exist. The precedents have already been set—not in theory, but in practice, by real states with real budgets and real taxpayers.
Michigan accomplished its entire Proposal A reform—eliminating school operating property taxes, raising the sales tax, passing 24 implementing statutes, and winning voter ratification—in nine months, from Governor Engler's executive order in August 1993 to the May 1994 voter approval at 69% (Citizens Research Council of Michigan, 1994). That was not some small adjustment. Michigan shifted school funding from 37% state-funded to 80% state-funded, rewrote the property tax assessment system, created a new State Education Tax, raised the sales tax from 4% to 6%, and passed every piece of implementing legislation in a single session. All 83 counties voted yes.
Texas's own 1968 state property tax abolition followed a seven-year phased schedule that worked without a single disruption to state services (Texas Constitution, Art. VIII, §1-e). The state property tax rate dropped $0.05 per $100 valuation each year from 1968 through 1974, reaching zero on January 1, 1975. There was no emergency. No crisis. No bailout. The existing sales tax and oil severance taxes absorbed the declining revenue seamlessly, because the plan was designed with replacement revenue in mind. Kansas is right now drafting SB 488, a three-year property tax phase-down with a consumption surcharge replacement (Kansas Legislature, 2026). Colorado passed SB 233 in 2024, implementing property tax caps with explicit bond carve-outs.
The infrastructure already exists. The Texas Comptroller already collects state and local sales taxes on a single unified return via WebFile and TEXNET, and distributes over $1.2 billion per month to more than 1,000 local entities (Texas Comptroller, 2026). In November 2025 alone, the monthly distribution was $1.3 billion—flowing to cities, counties, transit systems, and special purpose districts through the same channels that would carry the expanded revenue (Texas Comptroller, 2025). The legal vehicles have already been drafted: HJR 32 and HB 260 from the 89th Legislature provide templates for the constitutional amendment, and HB 1226 from the 88th Legislature already proposed franchise tax repeal.
The Bottom Line: Relief begins before the constitutional amendment is even on the ballot. The statutory reforms—franchise tax repeal, sales tax restructuring, exemption elimination—can all take effect during the 90th Legislature in 2027. The constitutional amendment goes to voters in November 2027. By December 2027, property tax levies go to zero.
The Two Tracks: What Requires What
The implementation plan operates on two parallel tracks. Understanding the distinction between them is essential, because it determines what happens when—and what the Legislature can do immediately versus what requires voter approval.
| Action | Legal Mechanism | Requirement | Timeline |
|---|---|---|---|
| Franchise tax repeal | Statute (Tax Code Ch. 171) | Simple majority + Governor signature | Immediate upon signature |
| Sales tax restructure to 5% flat | Statute (Tax Code Ch. 151) | Simple majority + Governor signature | Q3 2027 (90-day implementation) |
| Exemption repeal (§151.301–350) | Statute (Tax Code Ch. 151) | Simple majority + Governor signature | Same as restructure |
| Revenue distribution framework | Statute (Tax Code Ch. 321) | Simple majority + Governor signature | Same as restructure |
| School funding formula revision | Statute (Ed. Code Ch. 48) | Simple majority + Governor signature | FY 2028 |
| POS system updates | Administrative (Comptroller) | Agency action | 90-day grace period |
| Prohibition on ad valorem levies | Constitutional amendment (Art. VIII) | 2/3 vote both chambers + voter ratification | November 2027 ballot |
| Tier cap structure (0.75/0.75/3.50) | Constitutional amendment | Same as above | November 2027 ballot |
| Bond guarantee provision | Constitutional amendment | Same as above | November 2027 ballot |
| City absorption of school/special districts | Constitutional amendment (Art. VII, XI) | Same as above | November 2027 ballot |
Table 1. Statutory vs. Constitutional Actions. Green-highlighted rows can proceed immediately through ordinary legislation; remaining rows require the constitutional amendment process.
The strategic insight is clear: Track 1 (statutory) delivers tax relief before Track 2 (constitutional) even reaches the ballot. By the time voters go to the polls in November 2027, they will already be experiencing the benefits of a simplified tax code, franchise tax elimination, and the new distribution framework. The constitutional amendment then completes the job by permanently prohibiting property tax levies.
This is not just a legislative strategy—it is a political one. When voters walk into the booth to decide whether to permanently end property taxes, they will not be voting on a theoretical proposal. They will be voting on something they have already experienced. Businesses will have already seen the franchise tax disappear. The new sales tax rate will already be in effect. Monthly distributions will already be flowing. The question on the ballot will not be "Should we try this?" but "Should we make this permanent?" That is a very different vote.
Track 1: Immediate Statutory Actions (The 90th Legislature, January–May 2027)
The 90th Texas Legislature convenes on January 12, 2027, with pre-filing of bills beginning November 9, 2026 (Texas Policy Research, 2025). The 140-day regular session runs through May 31, 2027. Every major statutory component of this plan can be introduced, debated, and passed during this single session.
3A: Repeal the Franchise Tax (Tax Code Ch. 171)
The Texas franchise tax—a margin tax levied at 0.75% for most businesses and 0.375% for retail and wholesale—collected $6.86 billion in fiscal 2024, representing approximately 8.4% of total state tax collections (Texas Comptroller, 2024). It is widely regarded as one of the most complex and burdensome state business taxes in America.
Repealing it is purely statutory. The Legislature can do this with a simple majority vote in both chambers, and it takes effect upon the Governor's signature. There is no constitutional barrier. HB 1226 from the 88th Legislature already drafted the exact language needed. The $6.86 billion in lost franchise tax revenue is fully absorbed within the $173.4 billion generated by the 5% flat consumption tax—it is already accounted for in the math (Campbell, 2026).
The franchise tax is not just expensive—it is economically distortionary. It taxes business "margins" (the lesser of revenues minus cost of goods sold, revenues minus compensation, or 70% of revenues) at rates that punish businesses for hiring employees and buying materials. It creates a perverse incentive structure where companies optimize to minimize a tax calculation rather than maximize productive activity. The biennial revenue estimate for 2024–2025 projected approximately $7.28 billion from franchise tax (Texas Comptroller, 2023)—a significant sum for the state, but a drag on economic growth when measured against the broader economy.
Precedent: Ohio phased out its franchise tax beginning in 2005, replacing it with the Commercial Activity Tax (CAT), a broad-based, low-rate gross receipts tax. Ohio's Tax Commissioner documented that the franchise tax was "economically distortionary because it taxed retained earnings needed for growth" (Ohio Department of Taxation, 2005). The Council on State Taxation confirmed that states reducing franchise-type tax burdens see improved business climate rankings (COST, 2024). Research by Chow et al. (2021) published in Management Science found that a 1 percentage point decrease in corporate tax rate decreases the likelihood of corporate headquarters relocation by 9.1%—meaning every tax removed from the Texas business environment makes the state more attractive to investment.
What this means for Texas businesses: Every Texas business—from the corner barbershop to the largest Fortune 500 corporation headquartered in Houston or Dallas—immediately stops paying the franchise tax. That is $6.86 billion per year returned directly to the private sector, funding wages, expansion, and hiring.
3B: Restructure the Sales Tax to 5% Flat Rate (Tax Code Ch. 151)
The current Texas sales tax structure is a patchwork: 6.25% state rate, up to 2% local rate, hundreds of exemptions under §151.301–350, and a complex classification system that punishes small businesses disproportionately. The PricewaterhouseCoopers national compliance study found that small retailers (under $1 million in sales) spend 13.47% of sales tax collected on compliance—more than six times the 2.17% rate for large retailers (PricewaterhouseCoopers, 2006). The largest single compliance cost for small retailers? Documenting tax-exempt sales: 3.80% of collections goes just to proving that an exemption applies (PricewaterhouseCoopers, 2006). The current system is a regressive compliance burden that falls hardest on the businesses that can least afford it.
The plan replaces all of this with a single 5% flat rate on all transactions—no exemptions, no classifications, no complexity. When everything is taxed at the same rate, there is nothing to classify, nothing to exempt, and nothing to argue about during an audit.
The rate is allocated across three tiers:
- State tier: 0.75% (generates $26.0 billion)
- County tier: 0.75% (generates $26.0 billion)
- City tier: up to 3.50% cap (generates $121.4 billion)
This is a statutory change to Tax Code Chapter 151. The current 6.25% state rate was itself set by statute when Texas last changed its sales tax rate on July 1, 1990 (Texas Comptroller, n.d.). That change—from 6.0% to 6.25%—was one of seven rate changes Texas has successfully implemented since the sales tax was first established at 2% in 1961. Each change was managed through the Comptroller's existing administrative infrastructure without significant disruption to businesses or consumers (Texas State Historical Association, n.d.).
The Comptroller already collects state and local taxes on a single unified return, processes payments through TEXNET (the State of Texas Financial Network operated through the Federal Reserve Bank of Dallas) and WebFile, and distributes revenue monthly to over 1,000 local entities (Texas Comptroller, 2026). The Comptroller also maintains a Sales Tax Rate Locator tool that provides address-specific lookup of all applicable rates in real time, and processes local rate changes on a quarterly cadence (effective January 1, April 1, July 1, October 1) with hundreds of local jurisdictions changing rates each year (Texas Tax Code §321.102, 2021). The infrastructure does not need to be built—it needs to be reconfigured.
Exemption repeal is the critical companion measure. By eliminating all exemptions under §151.301–350, every transaction is treated equally. This is not just simpler—it is fairer. The current exemption system benefits industries with the best lobbyists, not the most deserving taxpayers. A flat base treats everyone the same.
New Zealand's GST, implemented in 1986 with minimal exemptions, demonstrated that broad-base, low-rate consumption taxes generate revenue that exceeds projections: the government originally estimated the GST would contribute 17% of annual tax revenues, but by 1991—just five years in—it contributed 23.8% (Muir, 1992). New Zealand deliberately rejected food exemptions and other carve-outs, and instead delivered benefits to low-income households through direct income transfers and social assistance. The result was a system so clean and efficient that it became the model studied by tax reformers worldwide. Australia followed in 2000 with its own GST; the Australian Competition and Consumer Commission conducted over 400,000 price comparisons and found that the average price change was just +2.6%, with 34% of product categories actually decreasing in price because the old wholesale sales tax was removed (ACCC, 2000).
POS System Transition
Modern cloud-based POS systems—Square, Toast, Lightspeed, Shopify POS—update sales tax rates automatically through software updates pushed by the provider, integrating with tax calculation services like Avalara, TaxJar, and Vertex that maintain real-time rate databases (North, 2024). For these businesses, the transition takes days. Legacy systems with older non-networked hardware require manual reprogramming, typically taking weeks to months (Avalara, n.d.).
The plan provides a 90-day grace period following passage, during which good-faith compliance efforts are sufficient. This mirrors the existing Comptroller process for local rate changes, which follows a quarterly cadence under Tax Code §321.102 with 6–9 months of advance notice (Texas Tax Code §321.102, 2021). Businesses have used this exact process for decades.
3C: Establish the Revenue Distribution Framework (Tax Code Ch. 321)
The three-tier allocation system is the mechanical heart of the plan. It modifies Tax Code Chapter 321 to create a clean, transparent distribution of the 5% flat rate across all levels of government:
| Tier | Rate | Annual Revenue | What It Replaces | Surplus |
|---|---|---|---|---|
| State | 0.75% | $26.0B | DPS ($10B), Rainy Day Fund ($5.7B+), retained ($6B+) | — |
| County | 0.75% | $26.0B | County property tax ($15.7B) | $10.3B |
| City | Up to 3.50% cap | $121.4B | School PT ($41.7B) + City PT ($15.7B) + Special District PT ($13.5B) + State education ($40.2B) | $10.3B |
| Total | 5.00% | $173.4B | All property taxes ($86.6B) + Franchise ($6.86B) + State sales tax + State education | $30.6B |
Table 2. Three-Tier Revenue Distribution Framework. City tier absorbs school district and special district funding responsibilities. Total replacement need: $142.8 billion. Revenue generated: $173.4 billion. Surplus: $30.6 billion (21.4% buffer).
Each city sets its own rate within the 3.50% cap—local control is preserved. A rural city with lower service needs might set its rate at 2.5%; a major metropolitan city absorbing large school districts and special districts might use the full 3.50%. This is the same principle that governs city tax rates today: local elected officials decide what rate their community needs, subject to a cap. The only difference is that the cap is now constitutional rather than statutory, and the base is consumption rather than property.
The Comptroller distributes revenue monthly through the same infrastructure that already handles $1.2 billion per month in local allocations (Texas Comptroller, 2026). Under Tax Code §321.502, the Comptroller distributes local sales tax allocations to municipalities "at least twice per state fiscal year" and "as often as feasible"—in practice, monthly. The distribution cycle runs approximately 5–7 weeks from point of sale to local government receipt: businesses file returns by the 20th of the following month, and the Comptroller processes and distributes allocations by the first week of the month after that (Texas Comptroller, n.d.). This means local governments receive a steady, predictable monthly revenue stream—no more waiting for annual property tax collections to trickle in through protest-delayed appraisal cycles.
The county tier replaces $15.7 billion in county property taxes with $26.0 billion in revenue—a $10.3 billion surplus that counties can direct toward law enforcement, roads, and infrastructure without any tax increase to their residents. This is not a cut; it is an upgrade. County sheriffs get more funding. County roads get more maintenance. County hospitals get more resources. All of it without a single dollar of property tax.
The city tier is the largest and most important, at $121.4 billion. It absorbs responsibilities currently funded by four separate sources: school district property taxes ($41.7 billion), city property taxes ($15.7 billion), special district property taxes ($13.5 billion), and the state education budget ($40.2 billion). The $10.3 billion local surplus provides additional headroom for cities to expand services, reduce rates below the cap, or build reserves.
3D: Begin the School Funding Transition
School funding is the single most complex piece of this transition—and the one with the clearest precedent.
Today, the Foundation School Program (FSP) under Education Code Chapter 48 funds Texas public schools through a formula that depends on local property values. The Basic Allotment of $6,215 per student in Average Daily Attendance for 2026–2027 (Texas Education Agency, 2025) is supplemented by local property tax collections. Districts that collect more than their entitlement must remit the excess through "recapture"—the Robin Hood system—which has cost districts between $2.7 billion and $4.5 billion per year since 2018 (Texas Education Agency, 2025).
Under this plan, property-value formulas are replaced with sales-tax-revenue distribution formulas. Cities receive school funding authority within their 3.50% cap. Robin Hood is eliminated entirely—it is no longer needed when funding is consumption-based rather than property-value-based. The system that was born from the Edgewood v. Meno (1992) litigation—the Texas Supreme Court decision that declared the school finance system unconstitutional due to inequities between property-rich and property-poor districts—becomes unnecessary because the funding source is no longer tied to local property wealth (Texas Policy Research, 2024).
ISDs continue operating during the transition. Teachers keep teaching. Buses keep running. Extracurriculars continue. The governance transition—how ISD boards evolve when cities absorb school funding responsibility—is a separate, phased process that can proceed over several years without disrupting classroom instruction.
Total public education funding in Texas reached $89.49 billion in FY 2024, with per-student funding at $16,219 (Texas Education Agency, 2025). Nothing in this plan reduces that amount. The city tier generates $121.4 billion—more than enough to cover the entire education budget plus all other city and special district services. The difference is that education funding is no longer held hostage to property values, appraisal cycles, and the political dysfunction of the recapture system.
Precedent: Michigan's Proposal A shifted school funding from 37% state-funded to 80% state-funded overnight on May 1, 1994 (Citizens Research Council of Michigan, 1994). Texas's approach is actually more gradual and preserves local control through cities rather than centralizing everything at the state level. Michigan's reform delivered immediate equity gains: per-pupil funding gaps between the poorest and wealthiest districts narrowed by more than 50% in the first five years. After the reform, voter hostility to school bond issues actually declined—outstanding school bonds roughly doubled from $3.8 billion in 1993 to $14.4 billion by 2010, demonstrating that communities were willing to invest more in education when the property tax burden was reduced (Citizens Research Council of Michigan, 1994).
For parents and teachers: Not a single dollar is cut from education. The $41.7 billion in school district property taxes, plus the $40.2 billion in state education funding, flows through the city tier. Schools keep their teachers, their programs, and their facilities. What they lose is the annual property tax bill sent to every homeowner in their district—and the perverse Robin Hood system that punishes communities for having rising home values.
Immediate Statutory Timeline
| Action | Legal Vehicle | Effective Date | Precedent |
|---|---|---|---|
| Franchise tax repeal | Statute (Tax Code Ch. 171) | Upon Governor's signature | Ohio 2005; TX HB 1226 (88th) |
| Sales tax restructure to 5% | Statute (Tax Code Ch. 151) | Q3 2027 (90-day implementation) | MI Proposal A (May 1, 1994) |
| Exemption repeal (§151.301–350) | Statute (Tax Code Ch. 151) | Same as restructure | NZ GST 1986 |
| Revenue distribution framework | Statute (Tax Code Ch. 321) | Same as restructure | Existing monthly distribution |
| POS system updates | Administrative (Comptroller) | 90-day grace period | TX quarterly rate change process |
| School funding formula revision | Statute (Ed. Code Ch. 48) | FY 2028 | MI Proposal A 1994 |
Table 3. Track 1 Statutory Actions. Every item can be introduced, passed, and signed during the 90th Legislature (January–May 2027).
Track 2: The Constitutional Amendment (Parallel Timeline)
While the Legislature passes statutory reforms, a parallel process advances the constitutional amendment that permanently ends property taxation in Texas. These two tracks operate simultaneously—not sequentially.
4A: Filing and Passage
Pre-filing begins November 9, 2026—60 days before the 90th Session opens (Texas Policy Research, 2025). A joint resolution is filed early in the session, January–February 2027. Constitutional amendments require a two-thirds vote: 100 votes in the 150-member House and 21 votes in the 31-member Senate. The Governor cannot veto a joint resolution proposing a constitutional amendment.
The legislative templates already exist. HJR 32 from the 89th Legislature proposed property tax elimination. HB 260 provided companion statutory language. These are not concepts being drafted from scratch—they are bills that were already introduced and can be refined for the 90th Session.
4B: What the Amendment Contains
The constitutional amendment encompasses five provisions:
- Art. VIII amendment: Establish tier caps (state 0.75%, county 0.75%, city 3.50%) with an overall 8.25% maximum retained for future flexibility.
- Supersede Art. XI, §5 home rule ad valorem authority: As detailed in the Home Rule article, this removes home rule cities' constitutional authority to levy property taxes.
- Prohibit new local ad valorem tax levies: No governmental entity in Texas may impose, assess, or collect an ad valorem property tax after the effective date.
- Constitutional guarantee for existing bond obligations: All outstanding general obligation bonds backed by ad valorem tax pledges receive an explicit constitutional guarantee of continued debt service.
- Authorize cities to absorb school district and special district functions: Enables the governance transition for education and special district services.
4C: Voter Ratification
The amendment goes to voters at the November 2027 constitutional amendment election—the standard odd-year election Texas holds for constitutional amendments. The canvass and effective date would be approximately late November to mid-December 2027 (Texas Secretary of State, n.d.).
Will it pass? Consider the evidence:
- Texas voters have approved 530 of 714 proposed constitutional amendments—a 74.5% approval rate (Texas Secretary of State, 2025).
- All 17 amendments proposed in November 2025 passed, including five property-tax-related measures at 65–89% support (House Research Organization, 2025).
- Michigan's Proposal A passed with 69% voter approval, carrying all 83 counties (Citizens Research Council of Michigan, 1994).
- Texas's own 1968 Art. VIII, §1-e passed at a general election with broad bipartisan support.
Texans have been telling us for decades that they want property tax relief. This amendment gives them the chance to end property taxes entirely.
Constitutional Amendment Timeline
| Step | Date | Requirement |
|---|---|---|
| Pre-filing | November 9, 2026 | Bill drafting begins |
| Session opens | January 12, 2027 | 90th Legislature convenes |
| Joint resolution introduced | January–February 2027 | Filed in House and Senate |
| Legislative passage | March–May 2027 | 2/3 vote both chambers |
| Publication requirements | September–October 2027 | AG-approved explanation; newspaper publication |
| Voter ratification | November 2027 | Simple majority |
| Effective date | ~December 2027 | Governor canvass; property taxes go to zero |
Table 4. Track 2 Constitutional Amendment Timeline. The entire process from pre-filing to effective date spans approximately 13 months.
Upon Ratification: Property Taxes Go to Zero
Day One Effects
When the Governor canvasses the election results—approximately December 2027—the constitutional amendment takes effect. On that day:
- All property tax levies cease. True zero. Every homeowner, every business, every farmer and rancher in Texas stops paying property taxes—not a reduction, not a cap, not a freeze. Zero.
- The constitutional guarantee activates for all existing bond debt service. Every outstanding general obligation bond is protected.
- Monthly sales tax distributions fully replace all former property tax revenue streams. Local governments experience no gap in funding.
- No new GO bonds may be backed by property taxes. Future infrastructure is financed through sales-tax revenue bonds.
- School funding continues uninterrupted from the city 3.50% cap allocation, which has been flowing since Q3 2027 under the statutory reforms.
Bond Obligations: Solved, Not Ignored
The most common objection to eliminating property taxes is: What about the bonds? Texas local governments have $257 billion in outstanding tax-supported general obligation debt, with school districts alone carrying $148.4 billion (Texas Bond Review Board, 2026). Annual debt service runs approximately $20–25 billion per year.
This plan addresses bonds head-on through a dual protection mechanism:
First: Constitutional guarantee. The amendment includes an explicit, irrevocable guarantee that existing bond obligations will be serviced. Local entities continue making Interest & Sinking (I&S) payments from their sales tax allocation. This is not a promise—it is constitutional law.
Second: Structural backstop. The Texas Rainy Day Fund (Economic Stabilization Fund), projected at $28.5 billion by FY 2027 and growing (Texas Comptroller, 2025), serves as a backstop if any local entity's sales tax allocation temporarily falls short of debt service requirements. The $30.6 billion annual surplus provides additional structural protection.
To put the numbers in perspective: $20–25 billion in annual debt service is a fraction of the $121.4 billion flowing through the city tier alone. Even in the worst recession in Texas history, sales tax revenues declined by approximately 9.5% over 14 months during the Great Recession (Texas Comptroller, 2020)—a decline that would reduce the city tier from $121.4 billion to approximately $109.9 billion, still vastly exceeding debt service requirements.
The full picture of Texas local debt is instructive. According to the Texas Bond Review Board, the complete breakdown of outstanding local debt as of FY 2025 is as follows (Texas Bond Review Board, 2026):
| Issuer Type | Tax-Supported GO Debt | Revenue Debt | Total Debt | % of Total |
|---|---|---|---|---|
| Public School Districts | $148.3B | $0.1B | $148.4B | 40.2% |
| Cities, Towns, Villages | $51.8B | $61.6B | $113.4B | 30.7% |
| Water Districts & Authorities | $30.4B | $25.4B | $55.8B | 15.1% |
| Counties | $16.7B | $3.6B | $20.4B | 5.5% |
| Other (colleges, hospitals, special districts) | $9.8B | $21.1B | $31.0B | 8.5% |
| Total | $257.0B | $111.9B | $368.9B | 100% |
Table 5a. Texas Local Government Outstanding Debt (FY 2025). The $257 billion in tax-supported GO debt is what requires the constitutional guarantee. Revenue debt ($111.9 billion) is secured by utility fees, rents, and other non-tax revenues and is unaffected by this plan. Source: Texas Bond Review Board (2026).
Note that $111.9 billion of the total $368.9 billion is revenue debt—secured by utility fees, hospital charges, and other non-tax revenues. This debt is completely unaffected by eliminating property taxes. The constitutional guarantee covers only the $257 billion in tax-supported GO debt, and even that is comfortably within the coverage provided by the plan's revenue streams.
Historical precedent for bond protection: California's Proposition 13 (1978) explicitly exempted pre-existing voter-approved GO bonds from the 1% property tax cap; bondholders were made whole (Federal Reserve Bank of San Francisco, 1979). Michigan's Proposal A left school districts' bond authority fully intact. Colorado's SB 233 (2024) explicitly exempted bond debt service from revenue caps. Kansas's SB 488 creates a separate local add-on surcharge specifically for bond debt service (Kansas Legislature, 2026). Every major property tax reform in American history has protected bondholders. This plan does the same.
Credit Rating Considerations
Rating agencies note that property taxes are slightly more stable than sales taxes: the Georgia State University study found average absolute deviation of 3.04% for property taxes versus 4.06% for sales taxes over 1970–2005 (Andrew, 2014). This is a real difference—but context matters.
The plan's $30.6 billion surplus (21.4% buffer) dwarfs any cyclical volatility in sales tax revenue. The Rainy Day Fund at $24.8 billion provides an additional cushion. And the constitutional guarantee is legally stronger than the current ad valorem pledge because it is backed by a $3.47 trillion economic base—the entire gross sales output of Texas—rather than local property assessments that depend on the accuracy of 253 separate county appraisal districts.
The Baruch College/CUNY study of Kansas found that deficit-financed tax cuts raised local borrowing costs by 34 basis points (Dzigbede & Pathak, 2021). But that was a deficit—Kansas cut revenues without replacement. Texas's plan is revenue-neutral with a surplus. The Kansas dynamic does not apply because the adverse effects stemmed from net revenue loss, not revenue source substitution.
And consider the Chicago precedent: the Chicago Sales Tax Securitization Corporation issues sales tax revenue bonds rated A+/AAA/AAA (S&P/Fitch/Kroll)—four or more notches above the city's GO bonds rated BBB/A-/A-. Properly structured sales tax bonds can achieve superior credit ratings to GO bonds from the same issuer (Nuveen, 2025).
| Feature | GO Bonds (Property Tax-Backed) | Sales Tax Revenue Bonds |
|---|---|---|
| Security | Full faith and credit; taxing authority | Dedicated revenue stream pledge |
| Typical credit rating | Varies by issuer | Can exceed GO (Chicago: A+/AAA vs. BBB) |
| Revenue base | Local property assessments | $3.47 trillion gross sales base |
| Voter approval | Required in most cases | Generally not required |
| Stress tolerance | Rate increases limited by caps | Las Vegas bonds: withstand 63% revenue decline |
| Bankruptcy protection | Less certain (GO unsecured in some states) | Special revenue bonds protected in Ch. 9 |
Table 5. GO Bonds vs. Sales Tax Revenue Bonds: Structural Comparison. Data from Nuveen (2025) and MunicipalBonds.com (2019).
Stabilization Phase (Years 2–5+)
The transition does not end on Day One. Several components require orderly wind-down, ongoing monitoring, and long-term management. None of these are obstacles to proceeding—they are administrative tasks with clear precedents and timelines.
6A: CAD Wind-Down
Texas's 253 county appraisal districts (CADs) were established by the Peveto Bill (SB 621, 66th Legislature, 1979) to consolidate property appraisal functions from over 3,000 separate taxing offices (Collin Central Appraisal District, n.d.; Texas Comptroller, 2015). They employ approximately 4,400–6,000 workers statewide, operate on a combined annual budget of $618 million, and maintain roughly 20 million property records (O'Connor, 2024; Harris Central Appraisal District, 2023).
When property taxes go to zero, CADs lose their reason for existence. The wind-down proceeds in phases:
| Phase | Timeline | Actions |
|---|---|---|
| Transition planning | 2028–2029 | System procurement; records digitization begins; staff hiring freeze |
| Records transfer | 2029–2031 | Digital records archived and transferred to Comptroller; GIS data preserved for county planning |
| Staff reduction | 2028–2032 | Managed through attrition, early retirement, and placement assistance; TWC coordination for WARN Act compliance |
| Final dissolution | 2032–2034 | Remaining offices closed; equipment auctioned; legal entities dissolved |
Table 6. CAD Wind-Down Timeline (5–7 Years). There is no statutory mechanism for immediate dissolution; the process requires legislative amendment to Tax Code Chapter 6 (Texas Tax Code §6.01 et seq., 2024).
The $618 million in annual CAD budgets is returned to taxpayers permanently. That is $618 million per year that was being spent on a bureaucratic apparatus whose sole purpose was to tell you what your house is worth so the government can send you a bill for it. When property taxes go to zero, this entire infrastructure becomes unnecessary.
The human dimension matters. Approximately 2,278 of the statewide CAD employees are registered professional appraisers, with the remainder in administrative roles (O'Connor, 2024). CAD employees with Registered Professional Appraiser (RPA) or Certified Appraiser (CA) designations from the Texas Department of Licensing and Regulation hold credentials that are directly transferable to the private sector—banks, insurance companies, and real estate firms all employ licensed appraisers, and the demand for private appraisal services would likely increase as real estate transactions become more active in a zero-property-tax environment.
The state workforce transition assistance program provides job placement services, retraining grants, and extended health coverage during the wind-down period. The Texas Workforce Commission (TWC) would coordinate WARN Act compliance for larger CADs like Harris County (697 FTE) and Dallas County (242 FTE) (Harris Central Appraisal District, 2023; O'Connor, 2022). Smaller rural CADs, typically employing 3–15 people each, can be wound down through natural attrition over a 3–5 year period. This is not a mass layoff—it is a managed, multi-year transition with a generous runway.
6B: Bond Maturity Sunset
Existing bonds mature and sunset over a 10–30 year horizon. School district bonds—the largest category at $148.4 billion—can mature up to 40 years from issuance under Education Code §45.001 (Texas Education Code §45.001, 2024). As each bond series matures, the constitutional guarantee for that series self-liquidates. No new GO bonds backed by property taxes can be issued.
Future infrastructure is financed through sales-tax revenue bonds—an established instrument with strong market acceptance. Nuveen's analysis shows that U.S. sales tax revenues have grown at a compound annual growth rate of 3.3% since 2005 and rebounded by over 40% since 2020 (Close & Kleinman, 2025). The broader tax base ($3.47 trillion in gross sales) provides a stronger foundation than local property assessments.
The plan also enables a citizen bond program—mini-bonds in denominations of $100–$500 that allow ordinary Texans to invest directly in their community's infrastructure. Denver, Cambridge, and Madison have successfully implemented citizen bond programs that build public engagement while diversifying the bondholder base. When a city needs to build a new fire station or expand a water treatment plant, it can offer bonds directly to its own residents—people who have a personal stake in seeing the project completed. This is local investment in the truest sense: your money, your community, your return.
The transition from GO bonds to sales-tax revenue bonds also opens a structural advantage. As Nuveen's analysis demonstrates, properly structured sales tax bonds can achieve superior ratings to GO bonds from the same issuer. The MBTA (Boston) sales tax bonds carry Aa2/AA+ ratings with over 3x coverage of annual debt service. Las Vegas sales tax bonds could withstand a 63% revenue decline before breaching 1.0x coverage (Close & Kleinman, 2025). A Bloomington, Minnesota sales tax bond was designed to withstand a 36% revenue decline while maintaining coverage. These are not marginal instruments—they are among the safest securities in the municipal bond market.
6C: Reserve Fund and Rate Adjustment
The $30.6 billion annual surplus builds structural reserves from the first year. Combined with the Rainy Day Fund, which is projected to exceed its constitutional cap of $26.5 billion starting in FY 2026 (Texas Comptroller, 2025), Texas will have one of the largest fiscal cushions of any state in America.
The Georgia State University study noted that "expanding the base to include services (which are less cyclical than goods) could reduce this instability gap" between property and sales tax revenues (Andrew, 2014). Because the 5% flat rate applies to the entire economy—goods and services alike—the base is inherently more diversified and less cyclical than the current goods-only sales tax.
Consider the trajectory of the Rainy Day Fund alone. Funded primarily by oil and natural gas severance taxes, the ESF has grown from $10.69 billion in FY 2022 to a record $24.28 billion in FY 2025—more than doubling in three years (Texas Comptroller, 2025). By FY 2027, it is projected to reach $28.5 billion, well above the constitutional cap. This is money the state already has, sitting in reserve, growing through investment income even without new deposits. Combined with the $30.6 billion annual surplus from the plan, Texas would have nearly $60 billion in combined fiscal cushion in the first year alone.
An annual review mechanism is built into the enabling legislation. If economic growth continues at historical rates, the rate can be reduced below 5% over time—giving Texans an even lower tax burden as the economy grows. Texas's gross sales base has grown at approximately 4–6% annually over the past decade. If that continues, within 5–10 years the 5% rate could potentially be reduced to 4.5% or lower while still generating sufficient revenue for all government services.
6D: Ongoing Monitoring
The plan includes three monitoring safeguards:
- Annual Comptroller report on revenue adequacy, distributed to all local entities and the Legislature.
- Automatic trigger mechanism: If revenue falls below 95% of replacement need in any quarter, the Rainy Day Fund automatically supplements the shortfall.
- Five-year comprehensive review built into the enabling legislation, requiring the Legislature to evaluate the plan's performance and make any necessary adjustments.
What Texas Learns From Other States
Every component of this plan has been done before—somewhere, by someone. The question is not whether it can work, but whether Texas has the political will to follow the precedents already established across the country and around the world.
| Precedent | What They Did | Timeline | Key Lesson for Texas |
|---|---|---|---|
| Michigan Proposal A (1994) | Eliminated school M&O property taxes; replaced with 2% sales tax increase + 6-mill SET | 9 months (Aug 1993 → May 1994) | Speed is possible; voter support (69%) was overwhelming; school funding equity improved immediately |
| California Prop 13 (1978) | 53% property tax cut with no replacement plan | Immediate + emergency state bailout | Warning: Don't do it without replacement revenue. Emergency legislation within 3 weeks. Chaos for a decade. |
| Texas Art. VIII, §1-e (1968) | Phased state property tax elimination ($0.05/yr for 7 years) | 7 years (1968–1975) | Texas has already done this once. Phased approach works without disruption. |
| Kansas SB 488 (2026) | 3-year property tax phase-down with per-transaction consumption surcharge | 3 years proposed | Revenue Replacement Reserve Fund + bond debt service carve-out model |
| Colorado SB 233 (2024) | Property tax caps with explicit bond carve-out | 2-year phase-in | Bond carve-outs protect credit ratings and bondholder interests |
| Tennessee Hall Tax (2017–2021) | 5-year phase-out of investment income tax | 5 years (1%/year reduction) | Gradual phase-out with zero disruption to state services |
| Ohio Franchise Tax (2005) | Replaced franchise + TPP tax with broad-base CAT | Phased | Revenue-neutral replacement preserves services; improved business climate |
| New Zealand GST (1986) | Broad-base, low-rate consumption tax replacing complex wholesale sales tax | 1 year implementation | Revenue exceeded projections by year 3; one-off CPI adjustment normalizes within 12 months |
Table 7. Precedent Comparison. Yellow-highlighted row (California) represents a cautionary example of what happens without a replacement plan. All other precedents demonstrate successful transitions.
The California warning is worth emphasizing. Proposition 13 cut property taxes by 53% with no replacement revenue. Within three weeks, the state legislature was in emergency session passing SB 154—a $4.17 billion bailout from the state surplus (Federal Reserve Bank of San Francisco, 1979). School district revenue per pupil fell from 5.7% above the national average to 20% below it within 16 years. Total local government revenue loss since 1978 exceeds $1 trillion.
Our plan is the opposite of Prop 13. Every dollar is replaced. Every bond is guaranteed. Every school is funded. The surplus is $30.6 billion—21.4% above the replacement need.
The Complete Timeline — At a Glance
Here is the full implementation timeline, from pre-filing through long-term stabilization. Two tracks run in parallel; the stabilization phase extends as needed.
| Date | Action | Track |
|---|---|---|
| November 2026 | Pre-filing begins for 90th Legislature; bill drafting finalized | Both |
| January 12, 2027 | 90th Legislature convenes | Both |
| January–May 2027 | Statutory bills passed: franchise tax repeal, sales tax restructure, exemption repeal, revenue distribution framework, school funding transition | Track 1 (Statutory) |
| March–May 2027 | Constitutional amendment joint resolution passes (2/3 vote both chambers) | Track 2 (Constitutional) |
| Summer 2027 | 90-day implementation period: POS updates, Comptroller systems reconfigured, business notification | Track 1 |
| Q3/Q4 2027 | New 5% sales tax takes effect; franchise tax repealed; tax relief begins | Track 1 |
| September–October 2027 | AG-approved amendment explanation published; voter education period | Track 2 |
| November 2027 | Voters ratify constitutional amendment | Track 2 |
| December 2027 | Amendment effective; property tax levies cease; TRUE ZERO | Track 2 |
| 2028–2032 | CAD wind-down; school governance transition; bond maturity begins | Stabilization |
| 2028–2057 | Existing bonds mature and sunset; constitutional guarantee self-liquidates | Long-Term |
Table 8. Master Implementation Timeline. Green-highlighted rows represent major milestones. The statutory track delivers relief before the constitutional track reaches the ballot.
Who Benefits — And How Much
The numbers are not abstract. They affect real families at every income level.
As detailed in the main article, the current Texas tax system is staggeringly regressive: the lowest-income 20% of Texans pay 11.1 times the effective tax rate of the top 20%. The 5% flat consumption tax reduces that ratio to 2.8 times—a 75% improvement in tax fairness (Campbell, 2026). And critically, all five income quintiles save money under this plan. There are no losers.
The franchise tax repeal returns $6.86 billion per year to Texas businesses (Texas Comptroller, 2024). Small business compliance costs fall dramatically when hundreds of sales tax exemptions are eliminated—the PricewaterhouseCoopers study found that small retailers spend 13.47% of sales tax collected just on compliance, versus 2.17% for large retailers (PricewaterhouseCoopers, 2006). A flat-rate, no-exemption system eliminates the classification disputes, exempt-sale documentation, and audit exposure that crush small businesses.
Homeowners see the most direct benefit: the average Texas homeowner paying $5,000–$8,000 per year in property taxes sees that bill go to zero. Home equity becomes true equity—not a liability that generates an annual bill from your county appraisal district. The elimination of property taxes also means the elimination of the entire protest-appraisal-litigation cycle that consumes thousands of hours of homeowners' time each year. No more surprise appraisal increases. No more fighting with the appraisal review board. No more hiring property tax consultants to argue that your home is worth less than the government says.
Renters benefit too, because landlords' property tax costs are currently passed through to tenants in the form of higher rents. When the landlord's property tax bill goes to zero, the competitive pressure of the rental market pushes those savings toward tenants. This is not theoretical—economists have consistently found that property taxes are capitalized into rents. The Institute on Taxation and Economic Policy confirmed the relationship: property taxes are included in the cost basis that determines rental pricing (ITEP, 2025).
Seniors on fixed incomes benefit perhaps most of all. Under the current system, a retiree who has paid off their mortgage can still be taxed out of their home by rising property values they never asked for. Property taxes are the only tax in Texas that can force you to sell your home. Under a consumption tax, you control your tax burden by controlling your spending. You will never be forced from your home because someone built a new subdivision down the street and your appraisal went up.
The NBER estimates that revenue-neutral shifts from distortionary taxes (like property taxes) toward consumption taxes increase national wealth by 2.9%, GNP by 1.3%, and labor supply by 0.6% in the long run (Smetters & Walliser, 2003). Applied to Texas's $2.4 trillion GDP, even a fraction of that growth effect represents tens of billions in new economic activity. Romer and Romer (2008) found that an exogenous tax increase of 1% of GDP lowers real GDP by 2–3%, with investment falling sharply. The inverse is equally true: removing a distortionary tax releases productive capacity. Every dollar that businesses currently spend on property tax compliance, franchise tax calculations, and appraisal protests is a dollar that could be spent on hiring, expansion, and innovation.
Addressing the Concerns
This plan has been designed to answer every serious objection. Here are the most common concerns and the evidence that addresses them.
Won't Sales Tax Revenue Be Too Volatile?
The Georgia State University study found property taxes have an average absolute deviation of 3.04% versus 4.06% for sales taxes (Andrew, 2014). That is a real difference—about one percentage point. But the plan accounts for it with a 21.4% surplus buffer ($30.6 billion) and a Rainy Day Fund exceeding $24.8 billion (Texas Comptroller, 2025).
Look at the actual Texas sales tax track record. During every major recession, the revenue decline was manageable and the recovery was swift:
| Economic Event | Sales Tax Impact | Duration | Recovery |
|---|---|---|---|
| Early 1990s Recession | No negative growth—revenues stayed positive | N/A | Immediate |
| 2001 Recession | Average decline of 1.7% | 18 months | Full recovery within 2 years |
| Great Recession (2008–2009) | Peak decline of 6.6% (FY 2010) | 14 months | +9.4% rebound in FY 2011 |
| Oil Bust (2015–2016) | Decline of 2.3% (FY 2016) | 1 year | +2.3% in FY 2017 |
| COVID-19 (2020) | Essentially flat (+0.2%) | N/A | +19.3% surge in FY 2022 |
Texas Sales Tax Revenue Performance During Economic Downturns. Data from Texas Comptroller of Public Accounts (2020, 2024). Even the Great Recession's worst year left revenues far above minimum coverage thresholds.
Even during the Great Recession—the worst economic downturn since the Depression—Texas sales tax revenue declined only 6.6% at its trough in FY 2010 (Texas Comptroller, 2024). A 6.6% decline applied to $173.4 billion still leaves $161.9 billion—$19.1 billion more than the $142.8 billion replacement need. The surplus buffer absorbs the volatility entirely. And during COVID-19—the most severe economic shock of the modern era—Texas sales tax revenue was essentially flat ($34.10 billion in FY 2020 versus $34.02 billion in FY 2019), shielded by e-commerce acceleration (Texas Comptroller, 2024). By FY 2022, revenues had surged to $42.97 billion—a 19.3% increase in a single year.
Approximately 57% of Texas tax revenue already comes from sales and use tax (Texas Comptroller, 2023). Moody's Investors Service has noted that states without personal income tax, like Texas, can actually experience less economic volatility because they avoid the pro-cyclical revenue swings that income-tax-dependent states face (Texas Comptroller, 2023). The plan builds on a base that has already proven its resilience across multiple business cycles.
What About the One-Time Price Impact?
Broadening the sales tax base to include previously exempt items will cause a one-time price adjustment on those items. New Zealand's 1986 GST introduction produced a one-off CPI spike—but inflation was already running at 11–16% before the reform, and within 18 months it had fallen to 4–9%, well below pre-reform levels (Muir, 1992). Australia's 2000 GST introduction showed an average price change of just +2.6% across 300 product categories, with 34% of categories actually decreasing in price because the old wholesale sales tax was removed (Australian Competition and Consumer Commission, 2000).
In Texas, the price adjustment is smaller than in those examples because we are not introducing a new tax—we are restructuring an existing one. The state rate drops from 6.25% to a net 5%, and the local rate structure simplifies. The newly taxed items (previously exempt services and goods) see a 5% tax applied, but this is partially offset by the removal of property taxes embedded in business costs, which currently flow through to consumers as higher prices. When a restaurant no longer pays property tax on its building, its cost basis drops. When a grocery store no longer pays property tax on its warehouse, that savings can flow through to shelf prices. The net consumer impact is substantially smaller than the gross rate change suggests.
Research from Indonesia's 2024 VAT increase confirms that "the gradual implementation was beneficial for the tax to GDP ratio" with "negligible crowding out of households," and that transparent allocation of revenues to social programs had "a positive impact on public confidence" (Silalahi & Kurnia, 2024). The key to managing consumer impact is transparency—showing people exactly where their tax dollars go—and the three-tier distribution framework does exactly that.
Can the Legislature Actually Get This Done in One Session?
The 140-day regular session provides ample time. Michigan passed 24 implementing statutes for Proposal A in a single legislative period (Citizens Research Council of Michigan, 1994). The Texas Legislature has historically demonstrated the capacity for major tax reform: in 2023, the 88th Legislature passed SB 2, which significantly reformed CAD governance, restructured property tax limitations, and expanded homestead exemptions—all in a single session. The 89th Legislature produced HJR 32, HB 260, and HB 1226 as working templates for this plan. The 90th Legislature does not need to draft from scratch—it needs to refine and pass these existing vehicles.
The session timeline is manageable. Pre-filing begins November 9, 2026. The session opens January 12, 2027. The last day to file bills is March 12, 2027. House bills must clear third reading by May 14, Senate bills by May 26, and conference committee reports by May 30. Sine die is May 31, 2027 (Texas Policy Research, 2025). Major tax legislation routinely passes in this window.
If additional time is needed, the Governor can call special sessions, which last up to 30 days each and can be called consecutively without limit (Texas 2036, 2025). In 2021, three consecutive special sessions were held on priority issues. Constitutional amendments can be proposed during special sessions and submitted to voters, allowing for a potentially faster election calendar than the standard November cycle (Texas Secretary of State, n.d.). Property tax elimination would warrant the same commitment—and then some.
What About the Teacher Retirement System?
The Teacher Retirement System (TRS) is a defined benefit pension covering all full-time public school employees in Texas. It is funded by employee contributions (~8%), employer contributions (~2% from districts), and state supplemental appropriations. The TRS executive director has testified that TRS can "withstand some outflow of teacher employment from public schools to private schools" (Texas Tribune, 2025)—and this plan does not create such an outflow. Teachers remain employed. Schools remain open. The only change is the funding source, from property taxes to sales tax allocations.
Because the transition preserves school employment levels, the active contributor base remains stable. TRS actuarial solvency is projected over a 30-year horizon (TRS, 2025). A multi-year governance transition, as proposed in this plan, gives TRS actuaries ample time to model any adjustments. This is a manageable concern, not a barrier.
The Plan Is Not Theoretical — It Is Proven
Every component of this implementation plan has precedent. Every dollar is accounted for. Every bond is protected. Every school is funded.
The math works: $173.4 billion in revenue against $142.8 billion in replacement need, with a $30.6 billion surplus—a 21.4% buffer that exceeds what any other state has built into a comparable reform.
The legal path is proven: Texas has passed 530 of 714 proposed constitutional amendments (74.5% approval rate), including five property-tax-related measures at 65–89% support in November 2025 alone.
The infrastructure exists: The Comptroller already collects and distributes sales tax revenue to over 1,000 local entities every month. The POS systems, the filing platforms, the distribution mechanisms—all operational.
The people want it. They have told us so at every election, in every poll, in every town hall meeting where property taxes are discussed. They want relief—not a reduction, not a cap, not a freeze. They want it gone.
Texas did this once before, in 1968, when voters approved a seven-year phase-out of the state property tax. It worked. No disruption. No crisis. Just a deliberate, phased elimination that finished the job by 1975.
We can do it again—this time, finishing the job for good.
The 90th Legislature convenes January 12, 2027. The statutory reforms can pass by May. The 5% flat rate can take effect by fall. The constitutional amendment can be on the ballot in November. And by December 2027, every Texan—every homeowner, every renter, every business owner, every farmer and rancher—can look at where their property tax bill used to be and see one number: zero.
Annotated Bibliography
Andrew, S. A. (2014). Tax revenue stability of replacing the property tax with a sales tax. Andrew Young School of Policy Studies, Center for State and Local Finance, Georgia State University. https://cslf.gsu.edu/files/2014/06/tax_revenue_stability_of_replacing_the_property_tax_with_a_sales_tax_brief.pdf
The most directly relevant academic comparison of property tax vs. sales tax revenue stability, using 1970–2005 data. Finds property tax deviation at 3.04% vs. sales tax at 4.06%, but notes that broadening the sales tax base to include services could reduce the instability gap. Provides the empirical foundation for the plan's surplus buffer design.
Australian Competition and Consumer Commission. (2000, October 20). Major ACCC survey confirms moderate GST price impact within everyday shopping guide expectations. https://www.accc.gov.au/media-release/major-accc-survey-confirms-moderate-gst-price-impact-within-everyday-shopping-guide-expectations
Over 400,000 price comparisons from 10,000+ retail outlets across Australia covering ~300 product categories, comparing pre- and post-GST prices. Average price increase was +2.6%; 34% of categories decreased. Provides real-world evidence that broad-base consumption tax transitions produce moderate, manageable consumer price impacts.
Chow, T., Huang, S., Klassen, K. J., & Ng, J. (2021). The influence of corporate income taxes on investment location: Evidence from corporate headquarters relocations. Management Science, 67(12). https://doi.org/10.1287/mnsc.2020.3906
Rigorous 1998–2018 study establishing that a 1 percentage point decrease in corporate tax rate decreases headquarters relocation likelihood by 9.1%. Supports the economic argument for eliminating the Texas franchise tax as part of the broader reform.
Citizens Research Council of Michigan. (1994). A review of Proposal A: The March 15, 1994 ballot proposal (Report No. 316). Citizens Research Council of Michigan.
Comprehensive analysis of Michigan's Proposal A from the state's leading nonpartisan policy research organization. Documents the nine-month legislative timeline, the 69% voter approval, the 24 implementing statutes, and the immediate school funding equity improvements. The most structurally analogous precedent to the Texas plan.
Close, D., & Kleinman, M. A. (2025, November 13). Consumer spending powers municipal infrastructure. Nuveen. https://www.nuveen.com/global/insights/municipal-bond-investing/consumer-spending-powers-municipal-infrastructure
Nuveen's municipal bond analysis showing that U.S. sales tax revenues have grown at 3.3% CAGR since 2005, rebounded 40%+ since 2020, and that sales tax revenue bonds can achieve superior ratings to GO bonds (e.g., Chicago A+/AAA vs. GO BBB). Documents stress tolerance: Las Vegas bonds can withstand a 63% revenue decline.
Collin Central Appraisal District. (n.d.). History of Texas Appraisal Districts. https://collincad.org/history-of-texas-appraisal-districts/
History of the Peveto Bill (SB 621, 66th Legislature, 1979) that created the CAD system, consolidating over 3,000 separate taxing offices into one CAD per county. Provides context for the CAD dissolution process.
Council on State Taxation. (2024). Total state and local business taxes: FY2024 50-state report. https://www.cost.org/globalassets/cost/state-tax-resources-pdf-pages/cost-studies-articles-reports/2511-10951-cs-50-state-report-v10.pdf
Authoritative 50-state study showing businesses paid $142.8 billion in corporate income and gross receipts taxes in FY2024. Documents that Ohio and Texas have reduced franchise-type tax burdens, confirming the national trend toward eliminating distortionary business taxes.
Dzigbede, K., & Pathak, R. (2021). State tax cuts and debt market outcomes: An empirical analysis of Kansas. Baruch College, City University of New York, Marxe School of Public and International Affairs. https://marxe.baruch.cuny.edu/wp-content/uploads/sites/7/2021/05/STATE-TAX-CUTS-AND-DEBT-MARKET-OUTCOMES.pdf
Definitive academic study of the Kansas tax experiment's bond market effects. Found deficit-financed tax cuts raised local borrowing costs 34 basis points and reduced probability of high credit ratings by 9 percentage points. Critically, the adverse effects stemmed from net revenue loss, not revenue source substitution—distinguishing the Kansas failure from Texas's revenue-neutral plan.
Harris Central Appraisal District. (2023, August 16). 2024 Budget [PDF]. https://hcad.org/assets/uploads/pdf/2024-Budget_Adopted-for-HCAD-Website.pdf
Budget document for the state's largest CAD (697 FTE, $117.4 million budget). Provides staffing and cost data used to extrapolate statewide CAD employment and budget estimates.
House Research Organization, Texas House of Representatives. (2025, July 28). Constitutional amendments proposed for the November 2025 ballot [PDF]. https://hro.house.texas.gov/pdf/focus/amend89.pdf
Official legislative analysis of the 17 constitutional amendments proposed for the November 2025 ballot, all of which passed. Documents the five property-tax-related measures that received 65–89% voter support.
Kansas Legislature. (2026). Senate Bill 488: Property Tax Freedom Act. Kansas Legislature Regular Session. http://www.kslegislature.org/li/b2025_26/measures/sb488/
Full text of Kansas's proposed property tax elimination, including the three-year phase-down schedule, per-transaction consumption surcharge design, Property Tax Freedom Reserve Fund, and local add-on surcharge for bond debt service. Provides a contemporary comparison model for Texas's approach.
Muir, R. S. (1992). The goods and services tax: Reflections on the New Zealand experience, six years on. Revenue Law Journal, 3(1). https://rlj.scholasticahq.com/api/v1/articles/6556-the-goods-and-services-tax-reflections-on-the-new-zealand-experience-six-years-on.pdf
Six-year retrospective on New Zealand's GST implementation. Confirms revenue exceeded projections (23.8% of tax revenues vs. 17% projected), that the CPI spike was a one-off effect normalizing within 12–18 months, and that broad-base, low-rate design principles are essential for compliance simplicity and revenue adequacy.
O'Connor Property Tax Reduction Experts. (2024, April 2). Harris Central Appraisal District — Budget and Parcel. https://www.poconnor.com/harris-central-appraisal-district-budget-parcels-arb/
Provides detailed staffing data for Harris CAD and statewide CAD estimates: approximately 2,278 FTE appraisers, 52/48% appraiser-to-administrative staff ratio, collective CAD budget of $618 million, and an estimated 4,400–6,000 total FTE statewide.
Ohio Department of Taxation. (2005). Ohio tax reform. Annual Report 2005. https://tax.ohio.gov/portals/0/communications/publications/annual_reports/2005_annual_report/ohio_tax_reform.pdf
Official documentation of Ohio's franchise tax phase-out and replacement with the Commercial Activity Tax (CAT). Demonstrates that revenue-neutral replacement of a distortionary business tax preserves government services while improving the business climate.
PricewaterhouseCoopers LLP, for Streamlined Sales Tax Project. (2006). Retail sales tax compliance costs: A national estimate. Published by NetChoice. https://netchoice.org/wp-content/uploads/2020/03/cost-of-collection-study-sstp.pdf
The most comprehensive U.S. study of sales tax compliance costs, covering 13,000+ retailers. Found small retailers spend 13.47% of sales tax collected on compliance vs. 2.17% for large retailers—demonstrating the regressive compliance burden of complex, multi-exemption tax systems that a flat-rate simplification would dramatically reduce.
Smetters, K., & Walliser, J. (2003). Consumption taxes and economic efficiency in a stochastic OLG economy (NBER Working Paper No. W9492). National Bureau of Economic Research. https://www.nber.org/system/files/working_papers/w9492/w9492.pdf
NBER general equilibrium study estimating that a revenue-neutral shift to consumption taxation increases national wealth by 2.9%, GNP by 1.3%, and labor supply by 0.6% in the long run. Provides the macroeconomic growth case for replacing property taxes with consumption taxes.
Texas Bond Review Board. (2026, February). 2025 Local Government Annual Report [PDF]. https://www.brb.texas.gov/wp-content/uploads/2026/02/2025LocalARFinal.pdf
Authoritative source for Texas local government debt data: $257 billion in tax-supported GO debt, $368.9 billion total, $148.4 billion in school district debt alone. Documents the scope of bond obligations that the constitutional guarantee must cover.
Texas Comptroller of Public Accounts. (2020, May). Recessions and revenues. Fiscal Notes. https://comptroller.texas.gov/economy/fiscal-notes/archive/2020/may/recession.php
Texas-specific recession performance data for sales tax revenues. Documents the Great Recession decline (9.5% over 14 months), the 2001 recession (1.7% average decline), and COVID-19 resilience (essentially flat). Provides the stress-test parameters for the plan's revenue projections.
Texas Comptroller of Public Accounts. (2024, September 3). Texas Comptroller Glenn Hegar announces state revenue for fiscal 2024. https://comptroller.texas.gov/about/media-center/news/20240903-texas-comptroller-glenn-hegar-announces-state-revenue-for-fiscal-2024-august-state-sales-tax-collections-1725392008875
Official FY 2024 revenue announcement. Confirms franchise tax collections of $6.86 billion and total state tax collections of $81.87 billion. Primary source for current-year revenue baseline.
Texas Comptroller of Public Accounts. (2025). Rainy Day Fund reaches its cap. Fiscal Notes. https://comptroller.texas.gov/economy/fiscal-notes/government/2025/esf-info/
Documents the Economic Stabilization Fund balance of $24.8 billion (FY 2025), projected growth to $28.5 billion by FY 2027, and the fund exceeding its constitutional cap from FY 2026 forward. Establishes the fiscal backstop available for the transition.
Texas Comptroller of Public Accounts. (2026, January 7). Acting Comptroller Kelly Hancock distributes $1.2 billion in monthly sales tax revenue to local governments. https://comptroller.texas.gov/about/media-center/news/20260107-acting-comptroller-kelly-hancock-distributes-12-billion-in-monthly-sales-tax-revenue-to-local-governments-1767804718379
January 2026 monthly distribution data: $1.2 billion to cities, counties, transit systems, and special purpose districts. Demonstrates that the Comptroller's existing infrastructure already handles large-scale monthly revenue distribution to over 1,000 local entities.
Texas Comptroller of Public Accounts. (n.d.). State sales and use tax analysis quarterly report — Historical state sales tax rates. https://comptroller.texas.gov/transparency/local/quarterly-report/hist.php
Complete history of Texas state sales tax rate changes from 1961 (original 2%) through July 1, 1990 (current 6.25%). Documents that the state has successfully implemented seven rate changes, the most recent over 35 years ago.
Texas Education Agency. (2025, February). Excess local revenue recapture [One-Pager PDF]. https://tea.texas.gov/finance-and-grants/state-funding/state-funding-manuals/excess-local-revenue-recapture-one-pager-feb2025.pdf
Official TEA data on recapture (Robin Hood) payments by year: ranging from $2.56 billion (2019–2020) to $4.54 billion (2022–2023). Demonstrates the magnitude of the recapture system that would be eliminated under the plan.
Texas Education Agency. (2025, July 10). House Bill 2 (HB 2) implementation: Foundation School Program (FSP) funding formula changes. https://tea.texas.gov/about-tea/news-and-multimedia/correspondence/taa-letters/house-bill-2-hb-2-implementation-foundation-school-program-fsp-funding-formula-changes-and-preliminary-school-year-2025-2026-summary-of-finances-sof-reports
Confirms the Basic Allotment increase to $6,215 per student for 2026–2027 under HB 2 (89th Legislature). Provides the current FSP funding formula baseline for modeling the school funding transition.
Texas Policy Research. (2025, September 14). Legislative calendar — 90th Legislative Session. https://www.texaspolicyresearch.com/legislative-calendar-89th-legislative-session/
Official calendar for the 90th Legislature: pre-filing November 9, 2026; Opening Day January 12, 2027; last day to file bills March 12, 2027; sine die May 31, 2027. Provides the procedural timeline for all Track 1 statutory actions.
Texas Secretary of State. (n.d.). Effective dates of constitutional amendments. https://www.sos.state.tx.us/elections/historical/canvasdt.shtml
Historical record of canvass dates for Texas constitutional amendments. Confirms that November election amendments typically become effective in late November to mid-December following the Governor's canvass.
Texas Tax Code §321 (2021). Municipal Sales and Use Tax Act. https://statutes.capitol.texas.gov/docs/TX/htm/TX.321.htm
The statutory framework governing local sales tax administration, collection, and distribution. Key sections: §321.101 (rate limits), §321.102 (effective dates), §321.301 (Comptroller administration), §321.501–504 (distribution mechanics). The foundation for the three-tier revenue distribution framework.
Institute on Taxation and Economic Policy. (2025, March 19). Housing affordability and property taxes: How to actually move the needle. https://itep.org/housing-affordability-and-property-taxes-how-to-actually-move-the-needle/
Analysis confirming the inverse relationship between property tax rates and housing prices. Documents that property taxes are capitalized into rents and purchase prices, supporting the argument that property tax elimination benefits renters as well as homeowners.
Romer, C., & Romer, D. (2008, March). Tax increases reduce GDP. NBER Digest. https://www.nber.org/digest/mar08/tax-increases-reduce-gdp
NBER findings establishing that an exogenous tax increase of 1% of GDP lowers real GDP by 2–3%, with investment falling sharply. Provides the inverse corollary: removing a distortionary tax (property tax) yields equivalent positive output effects.
Silalahi, H., & Kurnia, B. (2024). Analysis of VAT rate increase: Social justice and strengthening sustainable economic growth. Journal of Economics and Business Innovation, 1(4). https://doi.org/10.69725/jebi.v1i4.157
Analysis of Indonesia's gradual VAT implementation finding negligible crowding out of households and that transparent revenue allocation builds public confidence. Supports the case for transparent three-tier distribution as a consumer impact mitigation strategy.
Texas 2036. (2025, July 21). Understanding special sessions of the Texas Legislature. https://texas2036.org/posts/understanding-special-sessions-of-the-texas-legislature/
Explains special session procedures: Governor-called, 30-day maximum, limited to Governor's agenda, no bill-filing deadline. Documents that the Governor can call unlimited consecutive special sessions, providing backup legislative capacity for major reforms.
Texas Tribune. (2025, February 19). Texas Teacher Retirement System leader says Senate voucher proposal would not harm retirement funds. https://www.texastribune.org/2025/02/19/texas-teacher-retirement-school-vouchers/
Reports TRS executive director testimony that the retirement system can withstand employment shifts in public education. Relevant to the school funding transition's impact on TRS contributor base stability.
Texas Tax Code §6.01 et seq. (2024). Tax Code Chapter 6 — Local Administration. https://statutes.capitol.texas.gov/GetStatute.aspx?Code=TX&Value=6
Legal framework establishing county appraisal districts. Documents that there is no express statutory mechanism for CAD dissolution; dissolution requires legislative amendment or constitutional change. Provides the legal basis for the CAD wind-down timeline.