Missouri in the middle of the pack for property tax collection
As the economy has faltered over the past two years, a new report says stable property tax rates have created a steady source of revenue for state governments, including Missouri.
The Show-Me State, however, is in the middle third in terms of the impact of these collections on overall general revenue.
The report, compiled by home improvement software provider Porch, ranked the Show-Me state 33rd in property tax collection based on 2019 data from the U.S. Census Bureau. Property taxes accounted for about $6.8 billion of the state‘s $51 billion in total general tax revenue, according to the report, or 13.5% of the total amount. Annual property tax revenue per person was projected at $1,118.
According to the report, the United States as a whole earned 16.6% of its total collections from property taxes. With $557 billion in personal property collections nationwide, the report puts collections at $1,758 per person. Property taxes were the second most important source of revenue at the national level after intergovernmental revenues.
Alabama, meanwhile, was ranked No. 50 with just under 7% of its total share of general revenue made up of property tax collections. It also built up its $3 billion in annual tax revenue with $620 per capita collection, by far the lowest per capita collection rate.
These rates are far from the highest in the report: New Hampshire’s total general tax revenue was 36.5% from personal property collections, or $4.4 billion and $3,246 per person. According to the report’s authors, these collections reflect a very different tax structure than Missouri and an increased reliance on property taxes.
“Each state and local government offers a unique collection of revenue sources that weight income, sales, property, and other taxes differently,” the report said. “New Hampshire stands out in part because the state has no revenue or sales tax, so many services are funded locally through property taxes.”
According to the report, nine states have no state income tax, five have no state sales tax, and others have tax caps and rates that vary from place to place. to the other.
While Missouri relies on income and sales taxes to fill much of its general revenue coffers, Governor Mike Parson recently announced he was in talks to call lawmakers back to Jefferson City to cut personal income tax rates from 5.4% to 4.7% amid a record state funding surplus. He also proposed eliminating income tax for those earning $16,000 or less per year and couples earning less than $32,000 per year, changes that would likely also alter the composition of general government revenue. State.
The report also noted that while economic statistics have fluctuated wildly over the past two years amid a pandemic and numerous financial hurdles, taxes have remained a strong driver of state and local government budgets.
“Behind falling unemployment, rising wages and strong consumer spending, income and sales taxes have produced larger-than-expected revenues since the initial shock of the pandemic,” it read. “Property taxes tend to be more stable over time because property values are less sensitive to economic volatility than income and sales taxes.”
While this stability has kept budgets afloat, the authors believe that a rise in residential real estate values could further bolster the revenue stream.