By Chandra Dillard
Before voters head to the polls on Tuesday to determine the
direction of government leadership for the next few years, it is
imperative that they also arrive armed with complete knowledge
regarding proposed state constitutional amendments -- specifically
ballot Question 4.
This ballot question gives South Carolinians the chance to vote
on the institution of a 15 percent property tax cap over a five-year
period for property taxation purposes. While most taxpayers would
agree that such a proposition sounds tempting, the facts related to
such a cap should be enough for voters to think twice about whether
this constitutional amendment would provide true tax relief or
actually create a property tax shift that would hit lower- and
middle-class taxpayers hardest.
Several studies, including one from the Strom Thurmond Institute
at Clemson University, warn that capping the appraised value of
property will instead result in higher taxes for most taxpayers.
According to Howard Duvall, executive director of the Municipal
Association of South Carolina, the passage of this constitutional
amendment will mean nearly two out of three South Carolina
homeowners will end up paying higher taxes over time.
The bottom line is there will be a shift in the tax burden from
properties that are rapidly appreciating, like those located along a
waterfront, to those properties whose values are not increasing at
the same rate, such as those homes in lower- and middle-class areas.
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Since local governments are required to roll back their tax rates
after each reassessment to collect the same amount of revenue to
provide services, the result will be that a majority of taxpayers
will take on more than their fair share of the tax burden to make up
for the loss of revenue from those homeowners in the minority who
won't be contributing based on a true assessed value. In essence,
those taxpayers living in slower-appreciating properties will face
the burden of "subsidizing" those living in more expensive homes
with artificial caps.
Additionally, a homeowner won't even see the benefit of any kind
of tax cap break unless his home is worth at least $200,000. Renters
won't see any benefit at all and could likely experience higher rent
as landlords pass on their increased tax burden to the renter.
There are other unintended consequences to this amendment, as
well. Protecting higher valued properties from an increase in tax
value will result in higher tax rates on all other properties,
including automobiles, motorcycles and other forms of personal
property. Additionally, business owners, who will not receive the
benefit of the cap, could face a double whammy -- higher property
taxes and higher sales taxes without the benefit of any rollback to
cover school taxes. Guess who will pay for that? Most likely, it
will be the consumer, in the form of higher prices for goods and
services.
Voters are being presented with the property tax cap option on
this year's ballot because state legislators were attempting to
respond to legitimate constituent concerns regarding South
Carolina's tax system. That's commendable. However, without a
comprehensive review of the entire local and state tax system, which
would consider all aspects of the "three-legged" stool of property,
income and sales taxes, South Carolinians will continue to
experience tax policy enacted in a vacuum, with short-term solutions
that carry long-term implications.
That's why the city of Greenville and the Municipal Association
of South Carolina will join numerous other business organizations,
Chambers of Commerce, school leaders, and local governments in
calling on the South Carolina General Assembly to address our
state's overall tax system in its entirety.
Doing so would help ensure a sound, well-balanced tax system that
gives each class of taxpayer the assurance of paying their fair
share, that effectively rides cycles of the economy, and that
provides the consistency and stability needed by both government and
taxpayers.
So, on Tuesday, I would ask that each voter keep in mind the
long-term negative implications of a tax shift resulting from
passage of ballot Question 4. Beyond that, I also would urge that
each South Carolinian join countless other voices who will be
calling on our state legislators to take a comprehensive review of
our entire tax system and to address the creation of tax policy that
ensures a stable and competitive environment for the growth of our
economy and the financial well-being of all our citizens.
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