Where Missouri Republican candidates for governor stand on personal property taxes

by Meg Cunningham
Beacon: Missouri

Missouri Republicans running to win the governor’s race are trying to harness frustration over 2023’s property tax assessment fiasco with varying promises of cuts.

State Sen. Bill Eigel, a member of the far-right Freedom Caucus, has made eliminating personal property taxes on things like cars, farm and business equipment a top priority as a lawmaker and as a candidate.

Lt. Gov. Mike Kehoe and Secretary of State Jay Ashcroft both also talk about cutting personal property taxes, but haven’t released plans on how they would achieve that goal. All three candidates have also expressed interest in cutting corporate income taxes, while Eigel and Ashcroft have campaigned on repealing a 2021 increase of Missouri’s gas tax.

The Missouri General Assembly has toyed with cuts, but doesn’t have much to show for it.

Missouri’s 2.48% vehicle tax rate is the fourth highest in the country, according to a WalletHub analysis. Personal property taxes can be applied to individual property and property used for business purposes. Cars, trailers, mobile homes, boats, livestock and farm equipment are all subject to personal property taxes.

Property taxes pay for most of the cost of local governments, covering services like schools, ambulances and fire departments.

Statewide, about 20% of property taxes collected come from personal property. In 2022, about $1.9 billion in personal property taxes were collected across Missouri. 

Legislation aiming to cut personal property taxes has been met with fierce opposition from counties and local officials who rely on them.

In 2023, Eigel’s bill to gradually cut the personal property tax over 50 years ran into opposition from the Missouri Municipal League, Missouri Association of Counties, the County Commissioners Association and emergency service providers. They worried the cuts would gut their budgets.

Personal property is assessed at 33.3% of its value, and taxes are imposed on the assessed value of the property. Under Eigel’s legislation, Kansas City predicted a loss of $35 million in personal property revenue.

How other states have repealed the personal property tax

State legislatures across the country have looked to cut personal property taxes in recent years. An analysis from MultiState found 100 bills introduced across 23 states last year that sought to cut or wipe them out completely.

Missouri is one of at least 23 states that charge annual personal property taxes on vehicles, although other states do charge annual taxes based on car ownership, an analysis from The Kansas City Star found.

State researchers in Connecticut found that states that repealed the tax on vehicles did so gradually or only when taxpayers did something like applying for a vehicle title, which would trigger the elimination of the tax for that person.

In Rhode Island, lawmakers phased out the tax by increasing the exemption amounts that local governments were required to provide, or by decreasing the percentage of a car’s value that was taxable. And that state was on the hook for reimbursing local governments with any revenue lost from the repeal.

In Georgia, lawmakers replaced the state’s personal property tax with a one-time per owner tax, where revenue was divided between the state and local governments. The tax is due when someone buys a vehicle, but only then. The one-time tax replaces the annual property tax on a car and the sales tax. The revenue is then divided between the state and local governments gradually.

Other states have merged things that were once taxed as personal property into the category of real property. Wisconsin was the most recent state to take this approach, but the tax repeal passed by lawmakers there included a change to state law to allow the Milwaukee city and county to increase their sales tax to address some shortfalls in revenue.

This article first appeared on Beacon: Missouri and is republished here under a Creative Commons license.