Property tax relief: Government spending cap should be part of the equation

Any discussion on tax policy usually starts out where it should: Taxpayers in our state are overburdened, and elected officials promise relief.

Unfortunately, what we often end up with is a watered down version of the original plan. Policy-makers need to consider tax policy in the broader context of cutting government spending and providing the kind of tax relief to citizens that grows the economy.

The least popular tax today is the property tax, and the General Assembly has been focused all year on cutting the taxes on people's homes. That is as it should be. Those tax-es are far too burdensome, and the average homeowner is stretched to pay them. Many South Carolinians, particularly those on fixed incomes, risk being taxed out of their homes. It may even make sense to raise the sales tax to offset property tax relief.

But unless the spending side of the tax equation is addressed, South Carolinians will end up paying higher taxes than they would have before the swap. That's because government keeps growing, and education spending continues to rise. If spending caps are not part of a tax relief package, then government at all levels will simply raise those taxes right back up along with the increased sales tax.

Tax policy should be a comprehensive discussion. Ideas such as Gov. Mark

Sanford's Taxpayer Empowerment Act have to be part of any overall reform. That plan would impose spending limits on state government, forcing it to return surplus dollars to taxpayers instead of creating new programs. In essence, state government would have to live within its means.

Tax relief that does not come with spending cuts will put South Carolinians right back to paying high taxes, and that would be bad for our citizens and our economy. South Carolina might appear to have a low tax burden on the surface. But compared to neighboring states, with whom South Carolina must directly compete, our tax burden is one of the highest.

For example, South Carolinians pay the second highest per-capita percentage of income in property taxes in the Southeast. Only Florida has a higher per-capita percentage rate, but Florida does not have an income tax. Not only does South Carolina have an income tax, but at 7 percent it is tied with North Carolina for the highest rate in the Southeast.

Lawmakers debating tax relief must keep their eyes on the big picture. Any plan that appears to lower one tax while raising another without capping spending will actually result in a net tax increase down the road. In addition, no tax-cut plan should shift a burden from one sector to another. South Carolina businesses must be protected from a general tax increase. With a tax burden ranking that is among the least competitive in the Southeast, our state cannot afford to overburden businesses and create an environment that discourages investment and growth.

The guiding principle for any tax plan should be that the private sector grows an economy, not government. In the context of tax relief, there must be a discussion about education spending and the efficiency of the dollars. There must be a comprehensive strategy to reduce the growth of Medicaid.

Policy-makers need to give surplus dollars back to taxpayers rather than spending them on new government programs. Spending limits on local and state government must be imposed if any real relief is to be provided. Anything short of that will not help our state grow, and lawmakers must resist the political temptation to pass a plan that will cost us all down the road.

Ashley Landess is vice

president for public affairs

of the South Carolina Policy Council, a nonprofit,

nonpartisan research

organization in Columbia.

For more information about

the Policy Council, go to www.scpolicycouncil.com.