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Opinion: Legislators Should Act on Circuit Breaker Property Tax Relief for Missourians With Fixed Incomes

Policymakers know that Show-Me Institute and Missouri Budget Project often have differing views on tax policy. But when it comes to our state’s Circuit Breaker Property Tax credit, we agree that now is the time to make critical updates – and make good public policy even better.

Property taxes have garnered a lot of attention in the Capitol this year, and efforts to improve Missouri’s Circuit Breaker Property Tax Credit have gained deserved momentum. With just a few days remaining in the legislative session, legislators can enact a targeted tax cut that helps those who need it while staying true to tax principles that are right for Missouri.

Missouri’s Circuit Breaker Property Tax Credit is intended to help older adults and those living with disabilities stay in their homes, even if their property taxes increase. Like an electrical circuit breaker, the tax credit kicks in and offsets some of the cost of property taxes for low-income households when their property tax goes over a certain proportion of their income.

Sounds reasonable, right? The catch is that the parameters of the credit have not been adjusted since 2008. That is, neither income eligibility nor the credit amount have changed in fifteen years. As a result, the very Missourians the law was intended to help are losing access to the circuit breaker, leaving them struggling to pay their bills and even stay in their homes.

Updating Missouri’s existing “circuit breaker” program is simply good public policy. These updates include increasing the allowable tax credit and maximum level of income eligibility and tying both to inflation moving forward.

As it stands, although property taxes increase annually, the size of the credit is flat and hasn’t increased since 2008. Moreover, because eligibility isn’t adjusted for inflation, fewer people qualify – and those that do receive a smaller credit, with those at the upper end of eligibility receiving credits of less than $10 a year. While the tax credit is indeed critical for many Missourians, the program no longer serves as the circuit breaker it was meant to be.

That said, the expansions and increases in the credit amount that are being discussed are modest. They still maintain the focus of the program on lower-income senior citizens and Missourians with disabilities, which is one of the more beneficial aspects of Missouri’s program. Other proposals that have been floated to address property taxes would dilute this focus – and impose budget cuts on localities or require rate increases as a result.

Moreover, although property values and their corresponding taxes increase faster in some parts of the state than others, the circuit breaker helps older Missourians and those with disabilities in every single county in our state.

Missouri lawmakers can provide real property tax relief for older Missourians, disabled veterans, and Missourians with disabilities by improving the circuit breaker. And by updating the existing credit, we can maintain the benefits of our property tax system while assisting those for whom it genuinely imposes a significant burden.