Tax cuts, limits sail through S.C. House

S.C. House members pushed through three bills Wednesday that cut taxes or limit tax increases for many South Carolinians.

Critics said that, while the measures would help many residents, they also would make the tax system less fair, shifting more of the burden to the poor or to those whose homes haven’t appreciated in value as much as others’.

By overwhelming majorities, the House:

• Approved an income tax cut proposed by Gov. Mark Sanford and scores of House members. Under the bill, the state income tax would drop to 4.75 percent from 7 percent over 10 years. The cuts would come only in years in which the state’s Board of Economic Advisors predicts the state’s revenues will grow by 2 percent.

• Approved two bills that would change how local governments adjust property values for tax purposes.

Under one bill, counties could reassess values only when a property is sold. Under the other, valuations for tax purposes could never increase more than 15 percent.

All three bills go to the state Senate, which will decide whether to approve or amend them. Senate leaders are divided over the income tax plan.

The income tax cut passed, as expected, despite several objections from House Democrats.

House members also took the unusual step of approving two competing property tax measures — instead of choosing one.

Rep. Bobby Harrell, R-Charleston, who spent the afternoon shepherding the bills, said House members want to put the decision about which measure is best in the Senate’s hands.

“We’re trying to force some sort of reassessment relief for homeowners,” he said. “Ultimately, we think it’s incredibly important that we provide tax relief.”

Sanford thanked House members for their support of the income tax bill. Cutting that tax has been a key issue for Sanford since his 2002 gubernatorial campaign.

“We’ve taken a huge step forward in helping realize our shared goal of creating jobs, attracting capital investment and raising income levels here in South Carolina,” he said in a statement.

But property taxes have been the issue of most concern to many House members. It’s an election year, and many have said more voters complain about their property taxes than any other tax.

In Richland County’s recent reassessment, for example, the average property value increased by 16 percent. Some residents saw their property values jump more than 40 percent.

“It was ridiculous,” said Newton Hornsby, whose home in the Wheeler Hill neighborhood nearly doubled in assessed value.

Nick Kremydas, a lobbyist for the S.C. Association of Realtors, said the economy has depended on real estate over the last few years, and he wants to make sure people will continue to be able to afford homes. “Families in our state deserve broad-based relief.”

Most Democrats — many of whom opposed the income tax cut — voted for at least one of the property tax bills, saying it would help working and middle-class taxpayers.

They criticized Republicans for pushing the income tax cut through in a year in which the state faces a $350 million budget shortfall, saying the tax cut would benefit most the wealthy.

“If we’re going to spend $800 million on tax relief, I want it to be on property taxes,” said Minority Leader James Smith, D-Richland.

Local government officials say limiting reassessments benefits most those whose properties are rapidly increasing in value.

Those whose homes don’t appreciate as much would end up bearing more than their share of the tax burden if reassessments are capped, they say.

Richland County Assessor John Cloyd called Democrats “hypocritical” for opposing the income tax cut but supporting reassessment caps.

“They’ve hurt the very people they’re trying to help,” Cloyd said.

Smith said he planned to ask for an amendment that would give property tax credits to lower-income residents to offset the impact of caps.

But he withdrew the amendment Wednesday, saying he was afraid it would hurt the bill’s chances of passage. He said he would introduce the amendment again later if the Senate passes the measure back to the House.

Reach Talhelm at (803) 771-8339 or jtalhelm@thestate.com