Last year, the Special Committee on Property Tax Reform held listening sessions around the state for input on how to improve property tax rules in Missouri. State Rep Tim Taylor chairs that committee and he sponsored House Bill 2780 for property tax reform.

Property taxes are annual taxes paid for real estate and personal property. Typically 75 percent of property taxes go to schools. The remaining 25 percent fund services such as fire, ambulance, law enforcement, county roads and other local services.

Many Missouri tax payers saw double digit increases in property taxes in the past 2 years. This sticker shock caused citizens to request reforms in the property tax laws.

“The key provision that will provide relief to taxpayers,” Taylor said during Tuesday’s debate, “is the change that would require separate tax rates for the various types of property.”

“It is truly the one thing that is going to bring some relief to our constituents back home, and even to us as individual taxpayers,”

The Missouri State Tax Commission has been forcing county assessors to raise assessed values of residential and commercial real estate. This effort came with a backlash. The State Tax Commission is being sued by several Missouri counties. The counties are challenging the Commission’s authority to order mandatory, across-the-board property value increases, which they claim are “arbitrary and capricious” Not all real estate has increased in value and not all real estate values increase at exactly the same rate. The lawsuit is pending.

State Rep. Jim Murphy, a Republican from St. Louis County toured the state with Rep Taylor and the committee for reform. One of the top concerns they heard was the tax increases on residential property.

“In the last few years, as we saw residential assessments go up and the other assessments didn’t, it just piled more and more tax burden onto our residential property owners,” Murphy said. “And that was the biggest thing we heard as we traveled this state. The biggest concern we heard from taxpayers…”

“Was that people,” Taylor said as he finished Murphy’s sentence, “would be taxed out of their homes.” (Taylor and Murphy quoted from Missouri Independent.)

Higher property taxes have a negative effect for first time home buyers and retirees trying to stay in their homes on a fixed income.

The primary opposition to HB 2780 is from the school lobby who do not want a limit to increases in public school funding.

David Stokes of the Show Me Institute agrees that reforms are needed in our property tax laws, but he argues that property taxes help maintain local control. Eliminating property taxes would shift locally paid services to be controlled by state or federal agencies. “Hate them as much as you wish, but property taxes indisputably harm economic growth less than other taxes do. Missouri’s property tax system works best when the assessments are accurate, the tax base is wide, and the rates are low.”

HB 2780 passed the Missouri House and has been sent to the Missouri Senate for debate. To track the bill’s progress, go to https://house.mo.gov/ Search 2780 in the search box in top right corner of your screen.