The Taxman Confuseth

Some Missouri counties are moving forward with passing property tax freezes for seniors. This is unsurprising, as it is a classic example of something that is smart politics but poor policy. Giving one sector of the population—senior citizens (and the wealthiest sector at that)—a special tax deal is a terrible idea. But that is not actually the point of the blog post.

Counties are creating their own special rules for the tax freezes, and the fact is they simply have no authority to do that. They may be able to do whatever they want with the property tax revenues for the counties themselves (or the independent City of St. Louis), but these changes affect other entities such as school districts and municipalities.

Not all of the changes counties have included in their bills are necessarily bad (in that they may have made a bad idea slightly less bad) but a county can’t change the authority the state gave it to collect and distribute tax money for other taxing districts, like schools.

Jackson County passed an ordinance limiting the tax freeze to those with homes valued at less than $550,000. Camden County passed a senior tax freeze, and county officials stated that  improvements to the home that resulted in more than a 50% increase in assessment will trigger a reassessment and, presumably, a tax increase. It speaks to how poorly Senate Bill (SB) 190 (the bill in the Missouri Legislature authorizing the senior tax freeze) was drafted that it does not address what happens if senior citizens make substantial improvements to their home after they receive the tax freeze. Common sense would lead one to believe that the valuation and taxes are changed in that case, but maybe not?

The City of St. Louis has proposed a bill (but it has not passed yet) that makes significant changes to the eligibility rule, including raising the age to receive the tax freeze to 65. Those changes aren’t even bad ones (mostly), but they are not allowed by the state law. This article states that Greene County passed an ordinance limiting the tax freeze to those actually receiving social security, not just those eligible for it, but I don’t see that in the ordinance so I am not sure that is correct.

As an aside, now that St. Louis County had commendably rejected the freeze but Camden County (Lake of the Ozarks area) has passed it, I am intrigued by the question of how many St. Louis County residents with second homes at the lake will change their primary address to Camden County. (You can only get the tax freeze on your primary residence, not multiple homes.) Remember, residence is mostly a matter of intent. If you “intend” for your residence at the lake to be your primary house—and you at least do the bare minimum and register to vote there—it is just about as easy as that.

These various bills from counties are going to invite legal challenges, and I, for one, look forward to that happening.