It's unclear if renters would gain from the property tax relief that Texas legislators are battling over.

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Democrats in the Legislature proposed a long-shot tax-cut proposal on Thursday that would provide relief to a category of taxpayers who have been virtually excluded from the discussion: renters. This comes as an agreement to lower Texas' high property taxes continues to elude Republican lawmakers.

More over one-third of the households in the state are rented. They contribute one-fourth of the state's among the highest in the country school property taxes through their monthly rent. In the midst of the COVID-19 pandemic, rents in the state skyrocketed as a result of the housing boom. But as they argue over whether homeowners or companies should get a bigger discount on their property taxes this year, GOP lawmakers have all but ignored renters.

Democrats made tax relief for renters a cornerstone of a four-pronged tax-cut bill on Thursday in an attempt to change that. Renters would receive a cash refund equal to up to 10% of the rent they paid the previous year under the idea.

"You can't talk about property tax reductions without talking about every Texan, not just homeowners, but also 3.8 million householders who rent their homes," said state Representative John Bryant, a Dallas Democrat who worked on the bill.

The state comptroller's office would receive records from landlords that listed how much each renter had paid in rent. The cash rebate would then be determined by the comptroller's office, according to Bryant. The duration of the programme was not immediately known, but the Democratic proposal had a budget cap of $3.8 billion.

Unlike some other states, Texas does not provide a specific tax credit for renters, and none of the GOP's proposals for reducing property taxes include anything that unmistakably benefits tenants. Renters cannot claim homestead exemptions, the portion of a home's value that cannot be taxed to support public education because they do not own their own homes. Senate Republicans and Lt. Governor Dan Patrick propose to increase the homestead exemption for school district taxes in the state from $40,000 to $100,000.

Republicans and tax policy experts have periodically suggested that sending money to school districts to cut their tax rates will help tenants with growing rent costs. This tax benefit is known as "tax rate compression."

A source of contention and a major point of contention among the state's senior Republicans has been the portion of the $12.3 billion in property tax cuts that should be used for compression. Patrick wants to utilise slightly more than two-thirds of the $12.3 billion on compression and the remaining portion on increasing the homestead exemption, in contrast to House Speaker Dade Phelan who wants to use the entire amount.

Not only taxpayers who own homes would benefit from the tax cuts proposed by House Democrats. Homestead exemptions for homeowners would increase to $100,000 or 25% of their home's appraised value, whichever is higher, with a ceiling of $200,000 in place. Democrats in both chambers would set aside money to lower school property tax rates, but not as much as Republicans.

Democrats' tax-cut proposal would increase the state's basic allotment, which has remained at $6,160 since 2019 and is the base amount the state sends schools each pupil, by $1,000. According to Bryant, that equates to a "permanent" $4,300 wage rise for teachers.

How much compression would help tenants is tough to quantify. According to data published by the Texas Apartment Association, property taxes account for around 20% of each dollar of rent paid by tenants in the state of Texas, however that amount may be higher in the state's urban districts. The reasoning behind this is that if tax savings cause a landlord's property taxes to not increase as quickly, then renters' rents will also not increase as quickly. As landlords fight for renters, that influence will expand to the rest of the market, according to analysts.

"I think it would happen pretty quickly," said Adam Langley, associate director of tax policy at the Lincoln Institute of Land Policy, a think tank with Massachusetts roots. "It wouldn't necessarily happen right away, but I think it would happen pretty quickly."