Exempting Childcare Facilities from Taxes Is a Bad Idea

A version of this commentary ran in various newspapers across the state, including the Springfield Business Journal.

On August 6, along with voting in party primaries, Missouri voters are being asked to vote on a constitutional amendment to exempt all childcare facilities outside of homes from property taxes. While we all want more affordable childcare, this proposal is a terrible idea. Any small benefit to families with young children will be more than offset by higher property taxes on everyone else.

Many childcare companies are for-profit businesses. Nonprofit childcare facilities, like those in churches, are already tax exempt. I see no reason why for-profit childcare companies deserve a tax exemption, but for-profit auto repair shops don’t. Yes, childcare is important. So is having a functioning car to safely get to work. The argument that something should be tax exempt because, as the ballot language states, it “supports the well-being of children, families . . . and society,” is essentially meaningless. Nearly anything could be made tax exempt by that logic.

Furthermore, this proposal does nothing to restrain government spending. Any reductions in the property tax base will result in higher property taxes on other entities that don’t have the special exemption, such as your home, your farm, and other businesses. The overall effect may be small, but it will be real.

The property tax base should be set as wide as possible so that the tax rates can be as low as possible for all taxpayers. Shrinking that tax base does real harm, no matter how sympathetic the cause may be. Missouri voters should keep that in mind when they choose in August.