The fiscal implications of SJR 18 are minimal but noteworthy. According to the Legislative Budget Board, the resolution would result in a two-year net impact to General Revenue Related Funds of approximately $191,689 through the biennium ending August 31, 2027. This cost is primarily attributed to the publication of the resolution in preparation for the November 4, 2025, election. Additionally, the resolution would lead to a revenue loss of $304,000 to the Property Tax Relief Fund during the 2026-27 biennium. Since any loss to this fund must be offset by an equal amount from General Revenue to maintain funding for the Foundation School Program, the state would have to reallocate resources accordingly.

Looking at the long-term fiscal impact, the state anticipates an annual revenue loss of approximately $152,000 from the Property Tax Relief Fund starting in 2026 and continuing through at least 2030. This estimate is based on the assumption that business trusts will remain taxable on all revenue except capital gains and that other entities will not restructure to avoid taxation. If the capital gains tax had been eliminated in 2024, the projected franchise tax revenue loss would have been about $152,000. However, since Texas does not currently impose a capital gains tax, the resolution primarily functions as a safeguard against potential future taxation rather than eliminating an existing revenue source. No fiscal impact is expected at the local government level, as the resolution solely affects state tax policy.

SJR 18 proposes a constitutional amendment prohibiting the state legislature from imposing a tax on the realized or unrealized capital gains of individuals, families, estates, or trusts. This measure ensures that Texas maintains its reputation as a low-tax, business-friendly state by explicitly barring a tax that could otherwise be introduced in the future. By preventing such a tax, the amendment protects individual financial growth, promotes investment, and reinforces Texas’ commitment to free-market principles.

From a liberty-based perspective, this amendment aligns well with key principles such as individual liberty, free enterprise, private property rights, and limited government. Prohibiting a capital gains tax ensures that individuals and families retain full control over their financial assets without state interference. It also prevents the government from engaging in what many consider a form of double taxation, as capital gains often stem from investments made with already-taxed income. Furthermore, by safeguarding Texas’ tax structure, the amendment bolsters economic growth and encourages investment, both of which are essential for maintaining a robust and dynamic economy.

The proposed amendment is also consistent with the Republican and Libertarian Party platforms, both of which advocate for tax limitations and economic freedom. While the Texas Democratic Party typically supports progressive taxation as a means of funding public programs, this amendment does not eliminate an existing tax but rather prevents a potential future one. Given its strong alignment with the principles of economic liberty and limited government, SJR 18 is a prudent measure to ensure that Texas remains a tax-competitive state. For these reasons, Texas Policy Research recommends a YES vote on this resolution.