Your Vote Counts 2023: Proposition 3

BRYAN, Texas (KBTX) – A small number of liberal-leaning states like California and New York are considering versions of a wealth tax. This would tax what you own versus what you owe, according to Texas A&M accounting professor Michael Shaub. For example, property, cars and investments.

One of the 14 amendments Texas residents will soon vote on is Proposition 3. It states, “The constitutional amendment prohibiting the imposition of an individual wealth or net worth tax, including a tax on the difference between the assets and liabilities of an individual or family.”

“People in Texas don’t want the legislature to impose any additional wealth tax beyond that property tax without the expressed approval of the taxpayer,” Shaub said.

Lawmakers for a wealth tax may argue that it should be imposed for justice reasons, according to Shaub.

“Usually, the examples would be around the very wealthy,” Shaub said. ”That it’s not going to affect their lives to pay a tax on their wealth and so that’s the argument that’s made, and we may have some very necessary programs in the legislature’s mind that could best be funded by something like that, and the argument would be that it wouldn’t affect lower-income families. They won’t have to pay.”

On the other hand, Shaub said this could potentially be very damaging to lower-income families. Even if a family owns their home, they may not have additional money to pay that tax, according to Shaub.

“What they have to do is choose to pay that tax or fear that there will be some type of foreclosure or there will be penalties and interest with the state on that and so you get people in a bind who just can’t pay that.”

The professor said other areas a wealth tax could affect include savings and generational wealth.

“The incentive to save goes down because I don’t only get taxed on my interest income,” Shaub said. “I get taxed on just holding that savings account, so you’re gonna be incentivized to just spend that down.”

Texas still has no income tax and no plans for a wealth tax, but Proposition 3 is designed to prohibit one from becoming law in the future.