Those who
think that the state constitutional amendment to cap property values
is a surefire way to limit property taxes need to consider how the
change is likely to actually affect them.
The second constitutional amendment on Tuesday's ballot would
limit increases in the appraised value of real property to no more
than 15 percent every five years. Adjustments would be made to
reflect improvements made to the property, a decline in value or the
value of the property when it is sold.
While this might at first appear to be a boon to all property
owners, it is more likely to be a tax liability for many. The result
of the cap is likely to be a shift in the tax burden from properties
that are rapidly increasing in value -- such as waterfront homes --
to properties that increase in value more slowly -- such as most
middle-class homes.
In other words, the burden would shift from higher income
property owners to lower income property owners. According to
officials with the Municipal Association of South Carolina, two out
of every three taxpayers could end up with higher taxes if this
amendment passes. And a homeowner won't see a tax break unless his
home is worth more than $200,000.
Meanwhile, renters would see no benefit from the change and could
see a rent increase because landlords would pass along the increase
in their taxes. Taxes also are likely to rise on other real
property, including vehicles and other forms of taxable personal
property.
The increases would result from the nature of the state's tax
system itself. Local governments are required by state law to keep
the effects of reassessment neutral. After each reassessment, they
are required to roll back their tax rates -- millage -- so that they
collect roughly the same amount of revenue. But with a cap on
property values, higher-valued properties would be protected while
all other properties would have to make up the difference.
In addition, business owners would be hit with both higher
property taxes and, because of recent tax reforms that replace
property taxes assessed for school operations with a higher sales
tax, businesses already are certain to pay higher sales taxes. And,
of course, many of those added expenses will be passed on to
customers.
In short, this amendment is no bargain for most and a boon only
for a relatively few wealthy property owners. We think voters should
reject it.
| IN SUMMARY |
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This amendment would benefit wealthy property owners while
shifting tax burden to middle class.
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