Explainer: What Are 313 Tax Abatements?

September 29, 2022
TFR Staff
Corporate Welfare, Debt, Property Tax, Spending, State Budget

A topic that has become more popular recently due to Speaker Dade Phelan’s support for their renewal is Chapter 313 tax abatements. However, when interacting with taxpayers, I have noticed that most people have no clue about the controversial program. So, let me explain.

According to the Texas comptroller, Chapter 313 abatements are defined as:

The 2001 Legislature’s Texas Economic Development Act, often called “Chapter 313” for its position in the Texas Tax Code, allows public school districts to offer tax incentives for businesses that invest in their communities. The Chapter 313 incentive is designed to attract new businesses by offering them a 10-year limitation on their appraised property value for a portion of the school district property tax. In exchange for the value limitation, the business agrees to build or install new property and create jobs in the school district.

Ultimately, they are corporate welfare, plain and simple. This is where the government steals money from hardworking taxpayers and gives it to corporations in the form of tax breaks. It is immoral and it laughs in the face of conservative values. Tim Hardin, TFR president, has come out many times in opposition to 313s, previously stating:

“Abatements allow large corporations and those with political influence to temporarily exempt a portion of their property’s value from taxation, a privilege not granted to Texas homeowners or the vast majority of businesses. This has become an attractive option for giant corporations seeking temporary relief from Texas’ oppressive property tax rates.”

It is worth noting that both the Republican and Democrat party platforms have called for an end to this corporate welfare scheme. Yet lawmakers have continued to serve private interests instead of their constituents. Chapter 313s are used quite often to support unreliable green energy, which contributed heavily to our grid’s failure in 2021. Since its inception, businesses have received more than $10 billion in property tax exemptions—about $1 billion annually. That’s $1 billion from state coffers to school districts in order for them to subsidize businesses. Here is the list of all of the recently renewed 313 contracts, the majority of which are green energy.

The word from insiders at the capitol is that the deal has already been struck to bring 313s back from the grave, and Speaker Phelan has publicly stated his support for their renewal. It is incumbent upon taxpayers to make their voices be heard and to end this corrupt corporate welfare scheme for good.

So, what can you do to get involved?

The next legislative session is set to begin in January of 2023. Your elected officials need to hear from you.

Go read the Texas Prosperity Plan for yourself and voice your support for REAL property tax relief by signing up to support the TPP. You can also sign up for The Fiscal Note to stay updated on all fiscal issues that affect Texans, especially our broken property tax system. We CAN get real tax relief if we amplify our voices loudly enough.