Bill Would Give Mo. Homeowners a Tax Break
JEFFERSON CITY - A mid-Missouri senator is selling a proposal to give homeowners a one-time tax refund as a way to allow Missourians to spend more of their own money.
Sen. Eric Schmitt, R-St. Louis County, has proposed legislation to allow Missouri homeowners to claim a one-time tax credit worth 0.75 percent of the assessed value of their home. For example, an owner of a home with an $100,000 assessed value would get a $750 state tax credit. If an assessor says a home is worth $50,000, the homeowner would get a $375 credit.
The bill would apply to anyone who owned a home on Jan. 1, 2014, so homeowners would be able to try and claim the credit when they get their W-2's back for the 2014 tax year next winter. They would also need their 2014 property tax receipt to file their state return.
The legislation would affect state revenues in the 2015 budget year, which begins July 1, 2014. Legislative researchers estimate the bill would reduce state revenues by nearly $385 million.
The proposal comes at a time when lawmakers are crafting the 2015 state budget with more money than they have had to work with in the past. GOP lawmakers want to budget around a 4.2 percent revenue growth rate this year, higher than the 2.8 percent growth rate used to craft the 2014 budget.
Sen. Mike Kehoe, R-Jefferson City, said Republican lawmakers are looking for a way to put money back in people's pockets because he said they know how to spend it better than elected officials or bureaucrats do.
"It's an incentive for people who have gone out on a limb and have decided to be the owners of real property," Kehoe said. "It's a way to give funds back to them for investing in our economy."
Kehoe said Republicans are still trying to cut taxes after the defeat of a major income tax cut bill back in September. Republican lawmakers are considering several tax cut bills in the current legislative session, but Kehoe said many of those proposals look to provide tax relief and fix the state's income tax structure in the long-term.
Kehoe said the bill would be a short-term way to provide tax relief in the current tax year while lawmakers try to polish off more permanent legislation.
Jay Hardenbrook of the left-leaning Missouri Budget Project said the state could use recovering tax revenues to fund capital improvements instead of giving the money away at a time when the state budget is recovering from the woes of the recession years.
"We know that the state is spending less now when you adjust for inflation than it did back in the the 1980s," Hardenbrook said. "We need the funds for either one-time expenses or for a savings account not just to get rid of money as quickly as possible."
Hardenbrook said the bill is not fair because people who rent their homes would not benefit, while someone who pays property taxes on two homes would benefit most.
"If we do take that money and give it to a very specific group of taxpayers, basically picking who is going to win in this one-time tax relief, it only benefits a few people in the state," Hardenbrook said. "It certainly doesn't help us take care of our long-term needs."
The bill, Senate Bill 666, recently got first-round approval from the full Senate and the final vote could come this week.