Agricultural corporations with 10 or fewer shareholders, known as Subchapter S Corporations, have their farmland assessed at 4 percent, while corporations with 11 or more shareholders receive a 6 percent assessment.
The difference between a Subchapter S Corporation and other corporations, according to IRS code, is that the shareholders pay the taxes, not the actual corporation.
If passed by voters, the amendment would eliminate the exception for 10 or fewer shareholders, and all corporations would be assessed at 6 percent, said state Rep. Walton J. McLeod, D-Newberry, who introduced the legislation.
The amendment would be part of a one-two punch in which McLeod plans to introduce new legislation during the General Assembly's next session, which starts in January, to create a state law giving corporations with fewer than 75 shareholders the reduced 4 percent assessment, he said.
The limit of 75 shareholders would match the federal law, he said. His goal would be to increase the number of Subchapter S Corporations that receive the tax break, not take the tax break away from the small corporations, he said.
"My intent is to hopefully get the law to say that 75 shareholders would be the limit for a corporation to get assessed at 4 percent," McLeod said.
The idea behind the change is to give that tax break to larger family-run corporations, while major corporations with 75 or more shareholders, such as International Paper, would still be assessed at 6 percent, he said.
"Plenty of family operations now have (more than 10 shareholders) because they have more than 10 grandchildren," McLeod said.
Beaufort County Councilman Dick Stewart has opposed the change because he said it will affect other taxpayers besides agricultural corporations. If the shareholder limit is increased to 75, more corporations or groups of people will qualify for the tax break, and the county will take in less money.
"It has to be made up by other taxpayers," Stewart said. "It can affect the millage rate, the school board, the fire department ... Other people would be picking up that slack and paying those dollars."
While Deputy Beaufort County Assessor Robert Reems didn't know offhand how many Subchapter S Corporations were in Beaufort County, he said the number was small.
"I don't think there's enough (large corporations) to really be of significance," Reems said. "I don't think the revenue loss would be $5,000 in Beaufort."
Reems said more rural counties might feel more of a sting if corporations with between 11 and 74 shareholders were to qualify for 4 percent reassment.
"It doesn't look like it'd have much of an affect here," he said.
While it's correct to say less property tax would be collected if the shareholder limit was increased to 75, McLeod said that isn't his primary concern.
"Our goal is primarily to decrease the burden for taxpayers," he said.
While the S.C. Farm Bureau has not taken an official position on the issue, spokesman Reggie Hall said the change would be positive.
"From what we understand, increasing the number of shareholders (for the reduced rate) would enable large families to take advantage of that lower rate," Hall said. "There are some families that are that way."
If approved by voters, a constitutional change must be verified by the General Assembly and signed by Gov. Mark Sanford.