(The Center Square) – The Missouri Senate Monday night rejected a proposed five-year phase-out of the state’s property tax that could have saved state taxpayers nearly $1.5 billion by 2027.
On Thursday, the measure was resurrected as a proposal to make any increases in the personal property tax rate the same percentage as any real property tax rate hikes approved by counties, among a bevy of other provisions.
Three days after it voted 18-13 to reject the measure after a lengthy “perfection” debate, the Senate agreed in 24-10 tally to put Senate Bill 24, back on the calendar for discussion on March 18.
Sponsored by Sen. Bill Eigel, R-Weldon Spring, under the original SB 24, Missouri’s personal property tax rate would decrease from 33.3 percent of “true value” of tangible property across the state’s 114 counties to 0.001 over a five-year span.
“Current law requires that personal property be assessed at 33.3 percent of its true value in money,” the bill reads. “This act requires political subdivisions to annually reduce such percentage such that the amount by which the revenue generated by taxes levied on such personal property is substantially equal to any growth in revenue generated by real property assessment growth.”
Under the revised SB 24, “annual reductions shall be made until the percentage of true value in money at which personal property is assessed is equal to one-thousandth of one percent.”
Personal property taxes are also called tangible personal property taxes (TPP) and are assessed on property that can be moved or touched, such as business equipment, machinery, inventory, furniture, automobiles and boats.
According to the Washington, D.C.-based Tax Foundation, Missouri is among 43 states that levy a personal property tax in addition to property taxes applied to land and structures.
Seven states — Delaware, Hawaii, Illinois, Iowa, New York, Ohio, Pennsylvania — exempt all personal property from taxation. Five states — Minnesota, New Hampshire, New Jersey, North Dakota, South Dakota — exempt most personal property.
Components of the revised bill first surfaced as failed compromises Monday night when SB 24 drew bipartisan concern over its potential to abruptly cost local governments statewide up to $1.45 billion in 2027.
The initial proposal called for reducing personal property tax levies to 25 percent in 2022, 19 percent in 2023, 13 percent in 2024, 7 percent in 2025, and one thousandth of a percent in following years.
“When you take $1.4 billion out of Missouri’s state budget, it’s going to have an impact,” said Sen. Jill Schupp, D-Creve Coeur. “It’s going to impact these local communities on funding things like our schools, law enforcement, fire departments — I don’t know how our communities can continue to survive and thrive for the people of the community.”
Eigel’s revised bill includes an array of personal property tax provisions related to ethanol use and remote learning tax credits, and the creation of an ‘Economic Distress Zone Fund’ for high crime and infrastructure-challenged areas.
The bill does not propose eliminating the state’s personal property tax on automobiles. Missouri is one of 27 states that includes automobiles in its personal property tax assessments.
Sen. Eric Burlison, R-Battlefield, said he hears complaints about the state’s personal property tax, especially on automobiles, often.
“There’s no tax that ticks people off more than the personal property tax,” he said.
Eigel told the Missouri Times Thursday that the revised bill merits another look in order to “move Missouri away from a terribly regressive and unfair tax. No one should have to pay such a high tax to their government every Dec. 1 just for owning a car.”