For a typical $100,000 house in Columbia, if the owner lives in the house, he is taxed at the 4 percent ratio and also receives the benefit of the tax reduction passed under the Beasley administration. His taxes are about $700, depending on which tax district the property is in.

However, if the owner rents the property, he is taxed at the business rate of 6 percent and does not receive the Beasley reduction. His taxes are approximately $2,000. Thus, if the owner rents the house, his real estate taxes are almost tripled.

I know of no other state that has such a difference in the tax treatments between owner-occupied housing and rental housing. In Georgia, the $100,000 house might have $300 higher taxes if rented. In Tennessee all houses are taxed the same, whether owner- or tenant-occupied.

While many believe that real estate taxes are passed on to tenants, I believe the truth is more complex. Rents are based on market factors, mainly supply and demand of rental housing. The market determines rents. When taxes increase, the landlord-owner cannot just raise rents to compensate for the higher tax expense. If he raises the rent, the tenant can move to another rental house at market rates.

Over the past two years, low interest rates have made it possible for many people who formerly were tenants to buy houses. So the number of tenants has decreased, and rents have been stable, if not lowered. But during this same time, taxes have increased 10 percent to 20 percent. Landlords have had to absorb the tax increase with no offsetting rent increases.

I know many of you are not crying, reading about the plight of the overtaxed landlord. However, the question is still there: Who pays these higher taxes on rental housing? Stated another way, what would happen if South Carolina had a tax system similar to most states, in that rental housing was taxed much closer to the rate for owner-occupied housing? At first, the landlord would benefit, as rents would stay the same and his tax burden would be lowered. Later, the tenants would benefit from lower rents, as there would be an increase in the number of rental houses, and supply and demand would force rents to go down. Again, the market determines rents.

Why would lower taxes increase the number of rental houses? Basic economic theory teaches us that when an activity is taxed less, that activity increases.

Many times I have had possible clients talk to me about managing the house that they live in. They might be moving out of state and are considering renting the house rather than selling. Once I explain how their taxes will go up (on the $100,000 house cited above, they would pay more than $100 more per month), they realize that their payment plus the new higher taxation is more than they would receive in rent. So the decision is made to sell and not rent. This is what keeps the number of rental properties down.

So while tax increases are not passed directly to the tenants, the effect is the same: The higher taxes our state charges on rental property are paid by the tenants in the form of higher rents. I can’t imagine that this was the intent of the Legislature when this was first passed into law.

Lawmakers could change this by simply taxing rental property at the same rate as owner-occupied property and extending the Beasley tax reduction to rental property. Alternatively, several tax proposals before the Legislature would leave the disparities in place, but reduce their effect, by greatly reducing the property taxes everyone pays and by eliminating the Beasley tax reduction entirely.

I don’t know what the best approach is; the tax reform proposals being debated this year have a lot of additional elements to them that also need to be considered. But however they address it, legislators need to eliminate, or at least reduce, this extra tax on rental housing. It isn’t serving the public.

Mr. Holmes is the president of The Holmes Company Inc., a residential property management company in Columbia.