Posted on Wed, Oct. 11, 2006

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The tax rollback that’s mostly a hike

By HOWARD DUVALL

Guest columnist

On Nov. 7, the voters in South Carolina will have the opportunity to vote on an amendment to two articles of the state constitution. These articles deal with the valuation of property for tax purposes.

The explanation for Question 4 reads this way:

“This amendment will limit increases in the value of a parcel of real property for purposes of imposing the property tax to no more than fifteen percent every five years after the current value of the property has been adjusted: (1) to reflect improvements made to the parcel; (2) to reflect a decline in the value of the parcel; and (3) to reflect the value of the parcel when ownership of the property changes as the General Assembly by law defines such changes.”

Wow, the voter will think. I have an opportunity to limit my property taxes! I had better vote “Yes” on this amendment!

Well, this may not be the deal you think it is.

Several studies warn that capping the appraised value of property at no more than 15 percent increase over five years will result in higher taxes for most taxpayers. The artificial cap causes a shift of the tax liability from rapidly increasing properties to those that do not increase so quickly in value. In plain language, from the higher-income taxpayer to the lower-income taxpayer.

The chairman of the Greenville County Council says 62 percent of the properties in the county will see an increase caused by the reassessment cap. A study by Miley and Associates completed in March 2006 shows that $7.2 billion in taxable value will be shifted in just four counties: Beaufort, Berkeley, Florence and Richland. A study on a 15 percent cap in Beaufort County says, the higher rollback millage after capped reassessment means that many property owners will see a higher tax bill than they would have after conventional reassessment.

Why do these studies show that two out of three property owners will pay more taxes under the proposed cap? Local governments are required by state law to roll back their tax rate after each reassessment so that the same revenue is received to provide services. Protecting higher-valued properties will result in a higher-than-necessary tax rate on all properties. This includes automobiles, motorcycles, pickups and other forms of personal property.

Compounding the problem, business owners and renters will be hit with a double whammy: higher property taxes and higher sales taxes without the benefit of any rollback in school taxes. This cost will be passed to the consumer in the form of higher prices for goods and services.

So before you go to the polls on Nov. 7, think about your personal tax situation. Are you the one out of three taxpayers who will benefit from this amendment, or will you, like most South Carolina taxpayers, be left picking up the slack from the wealthy?

Mr. Duvall is executive director of the S.C. Municipal Association.