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Editorial: It’s personal

If you have lived in Missouri your entire life, getting a personal property tax bill on your car at the end of the year is a given. It’s as certain as death and … well, you know. 

But Sen. Bill Eigel wants to change that. 

Eigel, a Republican from St. Charles County, thinks it is time for Missouri to eliminate personal property taxes. For everyone who is tired of receiving a bill that comes due right around Christmas – which means literally everyone – this sounds amazing. It also sounds too good to be true, but is it?

Hating the tax on personal property, such as cars and recreational vehicles, is pretty easy. We pay sales tax when we purchase these things, and then pay additional tax every year just for owning them. It’s illogical. This double taxation doesn’t happen when we buy a loaf of bread or a television, so why does it happen when we buy a new Chevy?

Personal property taxes are also regressive. They place a much larger burden on those least able to afford it. Even worse, the relative tax rates are astronomically higher in the lowest-income municipalities. Your tax bill on, let’s say, a Jeep Grand Cherokee is far higher if you live in Normandy than if you live in Ladue. 

However, Eigel’s main point for eliminating the personal property tax in Missouri is pretty standard fare for a fiscal conservative. If you tax people less, they will spend more. When people spend more, the economy flourishes. When the economy flourishes, governments collect more real dollars in taxes, even at the lower rate. 

While this logic is a point of contention between conservative and liberal ideologies, it is pretty easy to draw a straight line to increased spending when a family gets a de facto tax break right in the middle of the holidays. 

All that aside, removing an entire segment of local tax dollars will not be an easy needle for Eigel to thread. Personal property accounts for roughly one-quarter of all property taxes collected, and property taxes make up nearly 40% of public school budgets, among other things. In states such as Illinois, where no personal property tax is levied, real property taxes are significantly higher. We may not want to pay that vehicle tax, but do we really want to be more like Illinois?

Tax revenues in Missouri are at an all-time high, despite two significant tax cuts in recent years, which validates the above argument. If Eigel can successfully get his bill to a vote of the people, it will be hugely popular. The bill is also a constitutional amendment, so once passed it will be very difficult to undo. The real trick will be ensuring that nobody goes behind him and simply raises other tax rates. 

Our view is that personal property taxes are inherently unfair and incredibly poorly timed. Eliminating this double taxation makes a lot of sense, but the mathematics behind the tax cut are too ambiguous right now. We urge Sen. Eigel to research and put forth hard numbers behind what this cut will generate for our great state, and what it will cost us. We are at the early days of this debate, but it is a debate worth having.

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