Commendable tax compromise falls short of goal

WHEN NEGOTIATORS emerged Thursday with a deal to eliminate school property taxes for homeowners and send some extra money to poor districts, Rep. Bill Cotty declared it “much better than I ever dreamed.”

That’s an understatement.

The package is a surprisingly good compromise that bears little resemblance to either of the bad plans from which it was ostensibly drawn. It is a testament to what legislators can accomplish when they are willing to seek the highest common ground.

And it is a remarkable show of good faith on the part of legislators being pushed by special interests whose only concern has been reducing their personal tax bills, regardless of how much that might cost other South Carolinians or disenfranchise local communities.

Unlike previous attempts to satisfy a vocal minority of homeowners, this package begins to move us in the direction of providing the same quality of education to every child in the state, rather than chaining a child’s opportunity to how wealthy his or her neighbors are.

The package does include several bad ideas: an arbitrary cap on local communities’ ability to set their own tax rates; a plan to tax identical properties at vastly different rates; a tax cut that forces those with frugal county governments to subsidize the free-spending habits of more profligate counties; a small overall tax cut in a low-tax state with tremendous unmet needs; and a nonsensical sales tax holiday for the busiest shopping days of the year. (So much for the idea of targeting tax cuts to spur the economy.)

Such provisions might be an acceptable part of a compromise that eliminates the fundamental inequities that have held us back as a state.

Unfortunately, for all the good intentions and movement in the right direction, this package doesn’t do that.

The key to unlocking South Carolina’s potential is providing all children, no matter where they live, with the education they need to become productive workers and taxpayers.

The political compulsion to reduce property taxes offered the only real opportunity in decades to accomplish that, by inextricably linking the funding fates of wealthy districts to those of poor districts. But that linkage is crucial to this approach: The political will to make sure a poor child has the same access to a good education as a wealthy child simply will not exist as long as wealthy districts can subsidize their state funding with local property taxes. And under this plan, they could still do that — on the backs of businesses, which already provide two-thirds of school property taxes.

Yes, this plan does provide an infusion of extra money to some schools that need it (although it does not do so uniformly), and it will eventually direct a greater portion of state funds to those areas in greatest need. But it doesn’t come close to eliminating rich districts’ advantage, and by answering the demand for property tax relief, it also takes the pressure off the Legislature to complete the job.

It is a very good compromise. But it’s not good policy. It should be rejected.