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Article published Dec 21, 2004
Veto of tax measure shows need for greater
reforms
Gov. Mark Sanford's veto of a measure that would have
capped tax increases after reassessment shows why the state's tax system can't
be tweaked to fairness.The tax system needs a major revision, a restructuring to
restore stability and equity.The bill Sanford vetoed would have limited the
increase in property values during reassessment to 20 percent. The General
Assembly passed the bill to protect homeowners from drastic property tax
increases due to reassessment.But Sanford pointed out that the bill would have
made the tax system less fair. It would have meant that some people were paying
taxes on less than the fair market value of their property. Other homeowners,
who are already paying taxes on the full value of their property, would have had
to make up the difference.And the bill would have benefited mostly wealthy
property owners. It is the oceanfront and lakefront homes that most quickly
increase in value. The bill would have held down taxes on those properties and
shifted the burden to other homeowners.The bill also would have impacted state
education funds. By holding down the assessed property value in waterfront
areas, where it should be increasing, those communities would have gotten more
state education money through the existing state funding formula.For those
reasons, Sanford properly vetoed the bill. But the problem that lawmakers were
trying to address through the bill still exists. In areas where property values
are rising quickly, homeowners can see their property taxes almost double during
a reassessment. That's an unreasonable burden to put on a family.But a genuine
solution won't be found through a piecemeal measure like that passed by the
legislature. It will be found only in a major reform of the state's tax
system.That system has become overly reliant on property taxes to fund local
governments and schools, which have too little flexibility in how they generate
their revenue.Legislative attempts to remedy the problem have only made it
worse. Homeowner's property tax relief has been distorted in the legislature so
that homeowners in some areas of the state get much less relief than others.
Lawmakers passed a measure to lower the assessment on vehicles, but that only
transferred more of the tax burden to homeowners.The system doesn't need any
more patches. It needs restructuring. Lawmakers should revamp the system to
restore simplicity and equity and enhance the ability of local governments to
raise their own revenue.