Property Tax in England
The National Land Tax, instituted in 1692, was levied on the more prosperous members of society, including royalty and commoners such as shopkeepers, tradesmen and innkeepers. Determined by Parliament each year, this property tax in England applied to both rural and urban landowners, with no provision made to reassess valuations, a standard which held until well into the 18th century.
Beginning in 1707, when the country joined to become the United Kingdom of Great Britain, the window tax was instituted. This form of English taxation was designed to tax citizens based on their prosperity. The window tax had two parts: a flat-rate housing tax and a variable tax based on how many windows the house had. (The window tax began with the 11th window; if you had 10 windows or less, you didn’t have to pay. If you had 10-20 windows, the rate went up; and up again if you had over 20 windows.) This tax was instituted as a way to tax the population according to their wealth without tying it directly to income.
Many people opposed income tax altogether because they didn’t want to disclose information about their personal income, believing it to be an unacceptable government intrusion into their private affairs and an affront to their personal liberty. It wasn’t until 1842 when the first permanent income tax in Britain was introduced, and it continued to be a controversial topic throughout the following centuries.
English Taxation on Goods
Even those English citizens who didn’t own property were taxed by an 18th Century England government eager to finance past, present and future wars. In England, taxes were set by Parliament, which levied excise duties on everything you needed to keep in your household, including essentials like starch, leather, salt, candles, soap and beer.
In addition, you would pay duties on products that were considered luxury items. These English taxes were collected on luxury goods like wine, silver plates, horses, gold and silver thread, hats and coaches. This luxury tax was geared toward wealthier consumers. Parliament was responsible for raising or lowering these duties. They also added or dropped items, depending on current needs. Because the tradesmen were the ones who paid the tax, consumers probably weren’t aware of the fluctuation in rates, although doubtless, they paid higher prices for the goods when the tax went up.
Taxation in The American Colonies
Early American settlers were granted a 7-year exemption from customs taxes and a 21-year exemption for all other taxes. By 1714, Great Britain was charging its citizens ten times as much as the average American residing in one of the 13 colonies.
Colonial Americans paid property taxes, poll taxes and excise taxes, and they were forced to contribute their labor a few days out of the month, building roads and performing other public functions.
Beyond English taxation, some colonies instituted their own taxes:
- Massachusetts: In 1634, Massachusetts instituted a “faculty” tax, which was assessed based on each resident’s estates and other faculties. This tax amounted to about one percent of the assessed amount.
- Connecticut: In 1676, a tax was levied on any person who wore silk ribbons. Also taxed were lace and buttons made of gold or silver.
By 1775, while colonists were paying one to two percent of their income in taxes, the British consumed one-fifth of its citizens’ GDP. In addition, citizens of Britain were mired in debt that had accumulated after years of worldwide warfare, while Americans were nearly debt-free. The British monarchy tried to even up the situation by raising taxes on the colonists to help pay their war debt and finance the 10,000 British soldiers stationed in the colonies.
Molasses, sugar and Madeira wine took a hit in 1764 when duties were placed on these items as a result of the Sugar Act. But it was the Stamp Act of 1765 that got the colonies up in arms. Their effort to impose a direct tax on the colonists instead of taxing imports and exports sparked Benjamin Franklin and his compatriots to object to “taxation without representation.” The Stamp Act was repealed and replaced by the Townshend Acts of 1767. Duties were imposed on 72 items, including tea. Most of these duties were repealed in 1770, but King George III kept the tax on tea to show the colonists that the crown could impose a tax whenever it wanted to. By this time, the Americans had begun to oppose all taxes and British controls, which put the revolution into motion.
Were American Colonists Overtaxed?
Although we may have the impression that America’s pre-Revolutionary War citizens were unfairly taxed, the truth is, they were paid more and taxed less than British citizens. The taxes at the time were actually going down, but the notion that the British could raise taxes anytime they wanted to was a catalyst for revolution.
Richard T. Ely, a prominent 19th Century historian, observed that “one of the things against which our forefathers in England and in the American colonies contended was not against oppressive taxation, but against the payment of any taxes at all.”[1]
How Does The Texas Tax System Work
Although it’s considered a regressive tax system, compared to other states, Texas taxes are actually pretty good. Here’s a rundown of the taxes in Texas:
- Texas State Income Tax Rate: First, the good news – Texas does not collect personal income tax. There are only seven states that do not have to worry about income tax rates.
- Property Tax: You’re probably wondering, “Does Texas have property taxes?” Here’s the not-so-good news: All residents of Texas are required to pay property tax. Your local government assesses the value of your property. The percentage of the assessed value that you pay is based on the tax rate set by your county and city. The better news is the money collected stays in your neighborhood to support local schools and government services. (Just to make you feel a little better, there are no states with no property tax.)
- Sales Taxes: The state sales tax rate is 6.25%, although local jurisdictions can add to this, raising it to as much as 8.25%. (There’s not a separate state luxury tax in Texas per se, although local governments can add it to their sales tax rate.) There are individual taxes on other items, including:
- Gasoline: 20 cents per gallon
- Cigarettes: $1.41 per pack
- Hotels: 6% of the room cost
Property Tax Loans Are Just a Click Away at Tax Ease
Property tax today is determined in a much more methodical way than in the early days of our country — and especially compared to English taxation. But whether you think they are fairly assessed or not, you still need to pay your personal property taxes in Texas or risk incurring huge penalties and late fees. Unlike the American colonists, you have a resource to help you pay property taxes. Whether you’re interested in residential property tax loans or commercial property tax loans, you can find relief in 5 easy steps. Learn more about Texas property tax loans from Tax Ease today!
[1] From the book, Taxation in American States and Cities by Richard Theodore Ely, 1888