On Property Taxation
Of all the positions I hold, the one that probably surprises people the most is my opposition to changes to the property tax system that would cap the rate of increase in home values, particularly the proposals that would favor senior citizens over everyone else.
This year in Jefferson City (as with every year) there are numerous proposals to implement such changes.
We have an example of this in California. In 1978, the state passed Proposition 13, which limited the increases in property assessments and taxes (although, to be clear, Proposition 13 went further than the proposed changes in Missouri would). Proposition 13 has certainly had its intended effect of making it easier for California residents to stay in their own homes. However, it has also reduced mobility, dramatically increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities for similar properties with similar services. I would not say that it has been an overall win for the state.
I support changes to our reassessment and tax system that keep assessments accurate while addressing the tax rate aspect of property taxes, as Senate Bill (SB) 711 did in Missouri about fifteen years ago. That bill required real estate tax rates to roll back no matter where the rate was in relation to its voter-approved rate cap, and that was a beneficial change. It is time now to expand the roll back provisions to personal property taxes, county commercial surcharges, and property taxes levied by the Kansas City school district.
A much more radical change I would like to see is an end to reassessments of individual properties. This is a costly and cumbersome process that is not needed in the days of Zillow. We could change the entire process to:
- Set home values at sale price (assuming a fair market transaction).
- During the biennial reassessments, determine the average increase for an area, such as a county, and raise or lower everyone’s assessed value by that amount, leaving an option for appeals in unusual cases and additional increases for home improvements, etc.
- Then—and this is key—roll back everyone’s taxes by the same percentage to offset the assessment increase. This eliminates the unfair tax hit that people whose assessments go up more than average currently face.
- Reset values at sale, as happens now.
This proposal doesn’t favor seniors over others, doesn’t lead to dramatic differences in property assessments and taxes for similar homes, and keeps the base broad. As I like to say, assessments should be as accurate as possible and the tax base should be as wide as possible so that the tax rate can be as low as possible for everyone to fund the necessary functions of local government.
As for senior citizens, funding the existing property tax “circuit breaker” program to help low-income seniors stay in their homes with targeted tax refunds is a better way to achieve this goal.
That about sums it up for me.