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Why Missourians have to pay personal property taxes

Illustration by Susannah Lohr I St. Louis Public Radio

Meredith Anderson spent most of her life in Maryland before relocating to the Show Me State a couple of years ago. The O’Fallon, Missouri, resident got a surprising "welcome to Missouri" letter in the form of a personal property tax bill on her well-worn van.

Needless to say, Anderson was more than a little confused. She didn’t pay personal property taxes on her vehicle in her old state. And she didn’t get why you needed to pay such a tax in Missouri.

“I was kind of taken aback when the St. Charles County revenue people came to me and said ‘Oh, your 13-year-old van with 200,000 miles on it? You have to pay us $100 a year for owning it,’” Anderson said. “And I was just surprised, because I paid sales tax for it. It’s been paid off for a decade. I didn’t quite understand why I had to pay for the privilege of owning my car.”

Full disclosure: As a native Illinoisan, I was also as surprised as Anderson when I got a personal property tax bill in the mail a decade ago. At the risk of jeopardizing my non-existent political ambitions, my lack of knowledge may have contributed to being a month late in ponying up cash to the fine governmental officials in Boone County.

The short answer to why Missourians have to pay property taxes on cars, motorcycles, trucks and boats is relatively straightforward: Missouri state law says so.

St. Charles County Collector of Revenue Michelle McBride said the legislature’s decision was based partly on equity.

“Instead of simply putting the burden of that on the backs of the people who own real estate, the legislature in Missouri decided to also have personal property,” McBride said. “Our neighboring state of Illinois used to have personal property many years ago. They eliminated it. But they did that by increasing other taxes, because the revenue has to come from somewhere.”

And the proceeds from personal property tax go to the same places as real estate tax: Things like schools, fire districts or libraries. 

Cars competing in the Great Race line up in Kirkwood, Mo. on Saturday, June 20, 2015
Credit Camille Phillips | St. Louis Public Radio
Even if your car is really, really old, you still have to pay personal property tax on it

“What a lot of people don’t realize is that while the county sends out tax bills each year, the county only gets about 5% of the tax revenue that’s paid,” said St. Louis County Collector of Revenue Greg Quinn. “The other revenue goes to school districts, municipalities and about 300 other taxing districts in St. Louis County.”

Some neighboring states that don’t levy a personal property tax (besides Illinois) include Oklahoma and Tennessee. Residents of Arkansas, Kansas, Iowa and Kentucky all have to pay personal property taxes.

“It is a sizable amount of money,” McBride said. “The tax rates on the personal property are the same as the real estate. So the largest share of that does go to the school districts, because they are the largest share of the real estate base also. And if the personal property were to be eliminated, that money would have to be made up somewhere.”

It’s not just cars and trucks that fall under the personal property tax. Business equipment and livestock also get taxed.

“Farmers actually pay on, yes, the animals that they own. Their livestock are considered personal property,” McBride said. “Businesses pay on the equipment and fixtures that they have inside their business. A manufacturing plant — the car plant at GM out in Wentzville — pays on its manufacturing line. The casino pays personal property tax on equipment — slot machines, games, etc. — that are owned or operated on that property.”

When I told Anderson about McBride and Quinn’s responses, she seemed (surprisingly) satisfied with the explanation.

“It definitely makes me feel better, because I bought my house in December in O’Fallon,” said Anderson, who is a teacher. “So I’m glad to know that my physical property taxes aren’t going to be as much on the home knowing that other people are carrying that burden. I feel little better kind of understanding that rationale.”

And as long as she keeps her van, it’s safe to say that Anderson’s tax bill will get a little lower in subsequent years as it declines in value. That could change, however, if she decides to invest in a flock of chickens.

Jason is the politics correspondent for St. Louis Public Radio.