Senior Citizen Property Tax Freezes in Stone and Webster Counties Are Not Sound Public Policy

A version of this commentary appeared in the Springfield Business Journal.

Several years ago, my colleagues and I were debating what the worst possible tax policy change could be. We settled on “exempting lottery winnings from income taxes.” While it may not be quite that bad, the ongoing effort to exempt senior citizens from property tax increases around the state are a similarly misguided attempt at tax reform that will have harmful effects on the counties where it becomes law. This includes Greene County, which passed the plan in 2023, and may include Stone (the county question) and Webster (Proposition 1) counties, each of which has the proposal on the November ballot.

State legislation passed in 2023 and amended in 2024 authorized any county to freeze the real property taxes of the primary homes for senior citizens who meet certain qualifications. Their property taxes would stay at the same amount they were when they become eligible for the plan, which for most people would be when they turn 62. The purpose of the bill is to help senior citizens stay in their homes as they age, but there are several major problems with this proposal.

This proposal is harmful simply because it reduces the property tax base. A major tenet of good tax policy is that the base should be as broad as possible so that the necessary rate can be as low as possible. Unless local governments cut services in response to the enactment of a tax freeze for seniors, it will almost certainly lead to higher tax rates on those property owners not eligible for the freeze. A senior tax freeze is every bit as much of a tax increase on non–senior citizens as it is tax relief for some senior citizens.

People who live in homes of similar value with similar public services should pay similar property taxes. The young couple who has lived in their Marshfield home for a year should not pay higher property taxes than their neighbor just because their neighbor has lived there for two decades.

Passage of this bill would also lead to the problematic situation in which people vote on property tax increases that they themselves will not personally pay. In Stone County, the Village of Indian Point has a sizable property tax increase also on the November ballot. Indian Point seniors can vote for the proposition knowing that they may not have to pay the increased taxes if the tax freeze also passes. That’s not good government. The single best aspect of property taxation is that it imposes the costs of local services on the people who use those services, unlike sales or local income taxes that are exported in part to visitors, commuters, and others. Instituting a system in which people vote on property taxes they won’t pay breaks that beneficial connection.

For a cautionary tale about the dangers of property tax subsidies and alterations, consider California’s infamous Proposition 13, which was passed in 1978. Prop 13 limited the increases in property assessments and taxes for homeowners. The measure has certainly had its intended effect of keeping property taxes low for longtime California homeowners. However, it has also reduced mobility, dramatically increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities between similar properties. This is not what the people of Southwest Missouri need.

According to data from the Federal Reserve, people aged 65 to 74 have the highest net worth of any age group. So why, if we were to pick any age group for tax exemption, would we pick the wealthiest among us? (People over 75 have less wealth than those 65–74 or 55–64, but they have a higher net worth than any age grouping under 55.) We shouldn’t be handing out property tax exemptions to anyone, whether those exemptions take the form of corporate subsidies, developer abatements, or senior citizen tax freezes.

While passage of these propositions in Stone and Webster counties would benefit some senior citizens, it would alter the property tax and assessment system in a myriad of harmful and biased ways. Property taxes work best when the assessments are accurate, the base is wide, and the rates are low. Senior property tax freezes do not move Stone County or Webster County in that direction.