Lawmakers propose larger tax break for low-income seniors, disabled

JEFFERSON CITY, Mo. -- Some state lawmakers are proposing to give a larger income tax break to low-income elderly and disabled residents as a way to offset their rising property taxes.

The legislature's Joint Committee on Tax Policy on Wednesday recommended a $250 increase in the annual income tax credit provided to some homeowners and renters.

Individual lawmakers already have filed bills proposing similar sorts of enhanced tax breaks for consideration during the legislative session that starts in January.

Property taxes figure to be a hot topic because some Missourians have been hit with sharp increases in the assessed value of their homes at about the same time their tax rates have risen.

An existing Missouri law is supposed to take the edge off those increases. When assessed property values rise by large amounts, local school districts are supposed to roll back their tax rates to offset some of the increase. But lawmakers say that is not always occurring, or at least not in the way they intended.

Senate President Pro Tem Michael Gibbons, R-Kirkwood, is sponsoring legislation that would both change the way the property tax rollbacks are calculated and increase the tax credit available to seniors and disabled.

Rep. Mike Sutherland, R-Warrenton, also has filed a bill to increase the tax credits.

Missouri's tax break applies to individuals earning less than $27,500 a year who are disabled or at least age 65, or married couples earning less than $29,500. It gives them an income tax credit of up to $750 to help offset their property taxes or rent payments.

The legislative committee, of which Sutherland is chairman, voted Wednesday to recommend that the maximum tax credit be raised to $1,000 annually.

Gibbons' bill proposes to raise it to $1,100.

Sutherland's version would raise the maximum tax credit to $800 and would make the program available to individuals earning up to $32,500 a year and couples earning up to $36,500.

Sen. John Griesheimer, R-Washington, said he would prefer to remove the tax credit cap.

"Seven-hundred-fifty-dollars is not enough. It used to be, but with some of the increases that have happened this year, it is woefully too little," Griesheimer said.

During the 2006 tax year, the state issued about $85 million in tax credits to 184,366 recipients under what is known as the "circuit breaker" property tax break for low-income seniors and the disabled, according to Department of Revenue figures.

The agency has no estimate on how much additional money the various legislative proposals would cost the state, said Revenue Department spokesman David Griffith.

Although proposals to expand the property tax credit have received early support, some lawmakers remain concerned about the cost and the precedent.

Sen. Brad Lager, R-Maryville, described the tax break as a form of "social engineering" that redirects the taxes paid by the public to government to instead pay the property tax bills of particular people. He urged colleagues to instead focus on the underlying problem with property assessment practices that is causing people's tax bills to jump.

"When there's a crisis going on and real challenges, the first thing we do is just throw money at it," Lager said.