Business interests should push for real tax reform, not local spending caps

The answer to South Carolina's property tax problems is not local government spending caps. It is genuine reform of the state's tax system.

Business interests concerned that the property tax burden has been shifted onto them have united with anti-tax groups to form a coalition urging the General Assembly to adopt spending caps for local governments.

Lawmakers are likely to listen to this coalition and adopt some form of cap. Doing so will perpetuate the myth that local governments and school districts are to blame for high property taxes.

But the problem actually lies in the tax changes made in Columbia and in the ineffective and piecemeal reforms lawmakers have passed over the past decade to curry favor with homeowners.

A decade ago, lawmakers passed a property tax relief measure that was supposed to exempt the first $100,000 of an owner-occupied home from school taxes.

Why is it that just 10 years later they had to enact another property tax relief measure for homeowners?

In the first place, they corrupted the original measure, redistributing the money so that some lawmakers could get more money for their counties. Homeowners in other areas, like Spartanburg, got less than the $100,000 exemption.

Lawmakers also kept passing additional tax measures without considering their unintended effects. They passed numerous incentives to industries that shifted the burden onto homeowners and businesses. They passed vehicle property tax relief that did nothing but shift that burden onto homes and businesses.

Now, businesses and lawmakers are outraged over the unintended effects of their latest relief measure, which puts school districts on an allowance from the state. That allowance is keyed to each school district's 2006-07 tax rate. Lawmakers are surprised that school districts are raising this rate to increase the budget they will get from the state.

Lawmakers have continually moved to restrict local governments while blaming them for high property taxes. They are likely to be eager for another round of this, particularly if it looks like they are responding to constituents.

It won't do the state any good. What South Carolina needs is a comprehensive tax system reform that distributes the tax burden equitably and allows local governments flexibility in raising their own revenue.