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S.C. Statehouse
Report
Sunday, March 26, 2006
VIEW: http://www.statehousereport.com/columns/06.0326.prop.htm
Property tax
debate rounds corner
By
Andy Brack
Publisher
SC Statehouse Report
 MARCH
26, 2006 - - Hats off to state senators for a responsible,
relatively progressive proposal to reshape the way property
is taxed in South Carolina. Compared to the fiery, reactionary
plan passed in February by the state House, the Senate proposal
is a breath of fresh air.
It also is something that realistically could get passed.
At the beginning of the session, it was pretty clear lawmakers
would do something to reform property taxes. They’ve
been under intense pressure from a variety of citizen groups
since last year.
Both chambers studied various proposals. The House ended up
taking a slash-and-burn approach to try to get rid of almost
all property taxes on owner-occupied homes. How? By raising
the sales tax rate by 2 cents to 7 cents statewide. In a nod
to making the proposal a little bit progressive, it also called
for getting rid of sales taxes on groceries.
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PHOTO
ESSAY. If you'd like to see a photo essay
of the devastation in New Orleans and Mississippi, click
here.
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But the House proposal has a big problem: By hiking the sales
tax by 2 cents, South Carolina would have one of the highest
sales taxes in the country. And if that isn’t enough
to make the Palmetto State less competitive economically,
a significant burden of the tax would fall on businesses.
In other words, the House plan would do a lot to help folks
with high property tax bills, but it would hurt businesses
that buy goods in the state and would tend to discourage investment
here.
It’s the policy equivalent of cutting off the state’s
economic nose to spite its face.
So in comes the Senate, whose members don’t face grumbling
voters in 2006. The Senate Finance Committee over the summer
launched a comprehensive review of tax structures and held
hearings across the state to listen to folks about property
taxes.
Senators seemed to listen a little more deeply than House
members, who apparently only heard this message: “Get
rid of property taxes.” But senators heard this, “Adjust
property taxes so that people aren’t taxed out of their
homes.”
Depending on the message, you’re able to come to quite
different policy conclusions.
In a plan approved by a special Senate subcommittee that will
be discussed in the coming week, the Senate calls for an extra
half-cent to be added to the sales tax rate to generate a
pool of $300 million to help offset property tax burdens.
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While the Senate offers a somewhat complicated policy proposal,
it can be boiled down into two parts:
Some relief for all. Two thirds of the pool of money
- - about $200 million - - would be spent to reduce property
taxes for every homeowner. It’s not clear how much that
would be, but the plan essentially calls for an extra exemption
to be allowed to homeowners to reduce the assessed value of
a home. In other words, if your home is worth $200,000, you
might get an extra $30,000 in an exemption, which means you
would be taxed on a value of $170,000 instead of $200,000.
For homeowners with modest homes, tax bills could be reduced
significantly.
Circuit breaker. The other $100 million would be used
to offset property taxes based on homeowner incomes. The most
homeowners would pay in property taxes - - after accounting
for the relief through the exemption above - - would be 5
percent of their incomes. After that amount, the $100 million
pool would subsidize the difference. This component of the
proposal is relatively progressive because it works best for
people who are cash poor and house rich, such as the person
on a fixed income who lives on the coast.
“For a good number of people in South Carolina with the
most modest homes, property taxes will just about go away,”
said state Sen. Wes Hayes, the Rock Hill Republican who chaired
the Senate subcommittee that developed the proposal.
If you’re thinking the Senate proposal might get caught
up in partisan bickering on the Senate floor, you might want
to think again after listening to what Senate Minority Leader
John Land, D-Clarendon, says:
“I think this is a beautiful compromise. Businesses should
be supportive of this idea and homeowners should be supportive.
I think it is a brilliant proposal.”
3/26: Different
kinds of cleanup
Another great cartoon from Bill McLemore:
 The
best way to get South Carolina news is to augment your morning
paper and TV show with SC Clips, a daily executive
news summary compiled from more than 30 state newspaper and
TV sources. It's delivered every business day and is packed
with news of statewide impact, politics, business and more.
Subscriptions are affordable at $30 per month -- and less
for business subscribers. More: SC
Clips.
3/19:
Citadel cadets help storm victims
To the editor:
You [Commentary,
3/19] might be encouraged to know that, among many
others who have helped that area, Citadel cadets have made
two - soon to be three - Katrina hurricane relief trips to
Waveland/Bay St Louis, MS. I've been fortunate to organize
those trips and, since I live in McClellanville and went through
Hugo here, I know exactly what you mean in trying to help
people wrap their minds around the enormity of the destruction
from Katrina.
Also, we've been doing hurricane relief missions for three
years now (my
students and I) and have learned some practical lessons for
such work and for organizing recovery, as have some of the
other groups.
-- Karen Shuler, The Citadel School of Business Administration,
Charleston, S.C.
Recent
feedback:
Ahead on cigarette
taxes
A look at how you often learn first about things in SC
Statehouse Report:
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From Statehouse
Report, 1/8/06
"The state's lowest-in-the-country
cigarette tax is a missed revenue opportunity that could
pay for serious improvements for education, curb smoking
and improve the health of South Carolinians. By raising
the tax which is painless for three out of four state
residents, there would be more than enough money to
fund free pre-kindergarten for 4-year-olds across the
state."
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From The
Post and Courier,
3/23/06
"The House Ways and Means Committee
should give serious consideration to a proposal to raise
the state's cigarette tax - the lowest in the nation
- to provide for expanded health care to children and
workers who can't afford medical insurance. Increasing
the cigarette tax by 32 cents a pack would raise an
estimated $112 million in state revenue. "
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Here's a "thumbs up" and "thumbs down" related to various
political news items from the past week:
Thumbs
up
Thanks to Dems: South Carolina Democrats may have seized
on the most original political ploy in years when two of them
– lobbyist Dwight Drake and state Sen. Brad Hutto of
Orangeburg paid $6,600 at a fund-raiser to win a dinner for
nine couples at the Governor’s Lace House in Columbia.
They invited all the gubernatorial candidates of all parties,
including, of course, the host governor. They are all coming,
along with their wives, as are Hutto and Drake and their wives
and others, including a reporter and his wife, who we suppose
will be our fly on the wall. And what did the candidate for
governor say to the other candidate for governor?
Making up: It may be hard for those outside politics
to understand how politicians can be at each other’s
throats during a political campaign, but at least courtesy
to each other outside of the political realm. For instance,
there’s Democrat Inez Tenenbaum, state superintendent,
who ran in 2004 against Republican Jim DeMint for US Senate
in a bitter, raucous campaign. DeMint won, but this past week,
they joined forces to promote the Pell Grant for students
in the first time they have seen each other in person. They
embraced briefly, then let bygones be bygones in an effort
to help a common cause.
Thumbs
down
Flagging: Rep. Ken Kennedy, D-Greeleyville, raised
many eyebrows in the House when he acerbically responded to
Rep. Catherine Ceips, R-Beaufort, that neither he nor his
family would be aided by the purchase of three Revolutionary
War battle flags and said he had thrown away Ceips’ letter
about the flags. Other representatives from both parties disagreed
with Kennedy, as did 107 members who voted to direct the Budget
and Control Board to enter into negotiations to buy the flags
before auction and to raise privately the $2- or $3-million
that would be needed to purchase the flags taken by “Bloody”
Tarleton of England in a Lancaster County massacre. Kennedy
didn’t even bother to vote.
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In each issue of Statehouse Report, you'll get:
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