Legislative Blog
J.B. Williams, J.D.
Ad valorem exemption for Medical manufacturers Prop 10 NO
A Blog about Property Tax and Sales Tax
A Bit of Background
The following backgrounds help summarize the author's views on both the general topic: Texas and more specifically Property Tax and Sales Tax as it relates to that topic.
Brief Summary of Texas
Texas is truly a Republic. There are a multitude of items that to modify the state constitution must be modified. So there are times when Constitutional amendments are on the voting ballots. While I sometimes abhor the wording, the concept that all of those legally able to vote in Texas must vote on the change is a good one. And bills in Texas are generally short, making it easier for everyone to understand.
Summary of Property Tax and Sales Tax
Blogs under this heading will focus on property taxes or sales taxes within Texas. They may hit upon other taxes that are implemented for specific areas. I'd love if our state could eliminate property taxes and go to a pure sales tax system. That way the more products/services you consume the more you pay. So higher earners would pay more in taxes. And food should remain a non-taxable item.
Blog Summary
88SJR87
Introduced: 3/13/23
House Passed: 5/17/23
Senate Passed: 4/13/23
Became Law:
Pages: 2
Sponsors: Huffman; Alvarado; West; Zaffirini; Bonnen
Resolution 10 - NO
Ad valorem exemption for Medical manufacturers Prop 10 NO
Published: 2023-10-18
This bill is meant to exempt from ad valorem taxation equipment and inventory held by a manufacturer of medical or biomedical products. The claim here is to protect the Texas healthcare network and strengthen our medical supply chain.
Remember anything exempt from taxation merely means everyone else pays more. The money still needs to come from somewhere. So either you pay the increased price for the medical test that uses the equipment or the medicine; or you pay increase taxes elsewhere to make up for lost revenue.
This law merely permits the legislature to exempt from ad valorem taxes tangible personal property held by a manufacturer of medical or biomedical products as a finished good or used in the manufacturing or processing of medical or biomedical products. But it's passage could mean lobbying and advertising making fear based claims that without being exempt costs will rise such that less people can afford them or that there will be less certainty in supply.
Rather than continuing to create a multitude of exemptions, perhaps the state could shift to a purely sales tax based system. That way those that use more, spend more and pay more in taxes. Food would remain tax exempt, and the state could still institute the annual sale tax exemption on school goods. It gets rid of the exempting some and shifting the burden of the tax to everyone else. Because every time they exempt groups from paying property taxes, it lessens overall revenues from property taxes and encourages/forces cities/counties/municipalities to increase rates to make up for lost revenue. I know my city increased their rates this year to make up for the millions in property tax exemptions that were removed from taxing under some other legislation. Property taxes are creating hardships. And they create hardships for renters because the amount the apartment complex owner pays in property taxes directly affects the amount of rent being charged. So everyone is affected whenever an exemption is put in place. I don't believe the general taxpayer in Texas needs to supplement the medical industry by granting it potentially millions in exemptions.
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