Used car values have risen dramatically in Missouri. Prices for used cars increased 25 percent in 2021 alone. Because Missouri is one of the only states with a personal property tax on cars, that increase is going to hit taxpayers hard come December.
The personal property tax is exempt from our Hancock Amendment rules on rolling back property tax rates as values increase. As car values have typically declined over time, this has not been a problem in the past. But with used car values increasing and no tax rollback required, local governments around Missouri will see an unexpected windfall in property tax payments this year. That is not how the tax system is supposed to operate.
There is a solution here. Local elected officials, including county, city, and school district representatives, should voluntarily roll their tax rates back once property valuations are finalized. St. Charles County government has taken the lead on this, and other local governments around the state should do the same for their residents. The personal property tax rate is unconnected to the real property tax rate, and rolling it back to a revenue-neutral level is simple, allowable, and—most importantly—good public policy.
Local governments in Missouri are awash in federal stimulus and COVID-relief funds, while ordinary citizens are getting hammered by inflation. Cities, counties, and school districts don’t need another bonanza on the backs of Missouri taxpayers. Rolling personal property tax rates back is the right thing to do.
Link to the letter on the EMissourian site here.
