Opinion: Everyone hates property taxes, which is why we should depend on them more

David Stokes

When the Emperor was trying to convince Anakin Skywalker to come over to his side he famously told him, “I can feel your anger. It gives you focus. Makes you stronger.” Right now, we could use some of that well-focused anger when deciding on local tax increases in Missouri.

I understand; people hate property taxes. In one poll by the University of Chicago Harris School of Public Policy and the AP, 69% of respondents said their local property tax was too high, and 59% said it was unfair. In another poll taken regularly through the years by Gallup comparing Americans’ views on taxes, the property tax was historically the least-popular tax. However, in the most recent poll (2023), the federal income tax (34%) edged out the local property tax (29%) as the “worst tax.” Unlike the income tax, the property tax does not deserve such contempt.

Nobody really likes taxes and, unsurprisingly, people like to tax other people more than they like to tax themselves. Because of our Hanock Amendment, residents get to vote on almost all tax increases in Missouri. I have closely followed hundreds of local tax increase campaigns around the state, and every campaign for a new sales tax, new hotel tax or earnings tax renewal follows the same playbook: “With this tax increase, we can make sure those shoppers/tourists/commuters (pick one) pay their fair share.” Convincing voters that other people are going to help fund their new service is a great way to get voters to approve what the government wants and not what the people need. Voters are more discerning on property tax increases because they know they will be the ones paying, and that’s a good thing.

Municipalities in Missouri depend less on property tax revenues than cities in any other state. That fact would probably surprise many readers. Cities depend primarily on various sales taxes. The local governmental bodies that depend entirely on property taxes, such as school districts, do so because they have no other choice under state law.

All taxes impact economic growth. Poorly constructed tax systems that waste money on ineffective projects or corruption hinder growth. Well-constructed systems that efficiently fund important public needs are good for growth. The property tax can often be the latter. It goes to the local services that people see and use every day. When those services are well run, the tax is capitalized into higher home values. When those local services are poorly run, it hurts the value of your home. While any tax can be harmful if set too high, economic research indicates that local property taxes at reasonable levels harm economic growth less than other taxes.

If a local city or school district isn’t providing the services you want for the taxes you are expected to pay, it isn’t that hard to move to a different community. Families move for better school districts all the time. Older people regularly downsize to smaller homes with the resulting lower taxes. Variances in services and quality in a property tax system give people options to choose what is best for them and their families at different points in their lives. (The senior citizen property tax freeze in Greene County and elsewhere breaks that connection in a harmful manner.)

Why do people have a particular disdain for property taxes? Perhaps it’s because it’s the only tax many people pay all at once, so it seems to hurt more. Perhaps people buy into the silly argument that you never really own property if you pay a tax on it. Whatever it is, the fact that people dislike property taxes means voters are more careful about approving property tax hikes than other types of tax increases. As a result, governments need to make stronger arguments and show results to justify property taxes in the first place. The “focused anger” of voters, to paraphrase the Emperor again, is precisely why cities and counties in Missouri should depend more on property taxes, not less.

Hopefully, though, we will stop short of going fully over to the dark side. I can’t even imagine how high the taxes on a fully operational Death Star would be.

David Stokes is director of municipal policy at the Show-Me Institute. He can be reached at david.stokes@showmeinstitute.org.