S.C. Statehouse Report
Sunday, June 11, 2006
VIEW: http://www.statehousereport.com/columns/06.0611.proptax.htm


Little guys to get burden of property tax reform
By Andy Brack
Publisher
SC Statehouse Report

JUNE 11, 2006 - - If you wonder what you're going to do with your big legislature-approved property tax cut next year, don't start spending it.

Why? Because the people who most will benefit from the cut, which still has a couple of hurdles to get past before going into effect, tend to be those who make a healthy income and live in a big house.

For everybody else - - the majority of South Carolinians - - property tax reform means you'll pay more overall in taxes, according to calculations by a respected state and local government researcher at Clemson University's Strom Thurmond Institute.

"Because housing values in South Carolina are fairly moderate compared to other parts of the country, the majority of people are going to end up paying more in sales taxes than they get in property tax relief because the value of their home is not substantially above $100,000," said the Institute's Ellen W. Saltzman. (Click here to download Saltzman's study.)

If you think about what she's saying, it makes sense. In the mid-1990s, the state passed property tax reform to provide relief on school operating taxes to homeowners for the first $100,000 on their homes. In other words, every South Carolinians has been getting a property tax break - paid from state coffers - for the last 10 years.

With this new property tax reform, property taxes for school operating costs will be eliminated and replaced by an increase in the sales tax by 1 percent, among other things. But the original exemption stays in place. So if your home is assessed at $100,000 or less, you won't qualify for any relief under the new plan. Here are a couple of examples:

  • In Beaufort County, a family in the middle that lives in a house worth $81,325 and has an adjusted income of $32,530 will pay $189 more in taxes under the new plan. A Beaufort family in the top 5 percent with an income of $172,000 and a house worth $430,000 will save $861 in taxes.

  • In Hampton County, where the school property tax rate is high, the savings for the wealthy are more dramatic, according to scenarios developed by Saltzman. The family in the middle still would pay $189 more in taxes, but a family in the top 5 percent would get a $3,970 tax break.

Bottom line: Under the new reform, the tax burden will shift from the wealthiest South Carolinians to those at the bottom - - from the top 20 percent to the bottom 80 percent.

"The beneficiary is the guy with the big house at the beach, the big house in the mountains, the big house on the river or the big house at the lake, or if you live in the historic district of someplace like Beaufort or Charleston," said Rep. Thayer Rivers, the Jasper County Democrat who asked Saltzman for the study. "The average South Carolina citizen is going to pay more in taxes because the average South Carolinian doesn't have a house in those locations.

"It's a classic case of the squeaky wheel getting the grease," said Rivers, who admitted he voted for the plan because it would send more money for education to Hampton and Jasper counties. "The little guys get the taxes."

One of the biggest squeaky wheels, real estate businessman Emerson Read Sr. of Charleston, lives in a King Street house appraised at $1.13 million, according to current tax records. Based on this, he'll get a tax break of at least $3,823.39 on school operating taxes, unless he plans to buy at least $382,339 in consumer goods over a year.

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Read, who runs an organization called NoHomeTax.org, says he'll probably get a tax break of about $5,000 due to the planned changes, which can't take effect unless a constitutional amendment passes in November.

At one point in a testy interview, he admitted people who live in homes of $100,000 or less would end up paying more in sales taxes and wouldn't get extra property tax relief. But later he steadfastly denied lower-income people would absorb the tax burden of the reform so people like him could get a tax break. A single mother struggling to make ends meet, for example, wouldn't pay more in taxes, he argued, because increased collections in sales taxes would make up the difference - particularly since (he claimed) tourists pay 40 percent of sales taxes.

Hmmm. I'll side with the Clemson researcher on this one.

Andy Brack's new book of commentary, Bugging the Palmettos, is available for $15.00. Click here for more.

Recent commentary


lighter side

6/11: Same-sex marriage

Another great cartoon from Bill McLemore:


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feedback
6/6: Column shows bias

To the editor:

I love your analysis (Commentary, 6/4) on the Republican candidates and the specifics you offer on them. To bad you dont have specifics where your favorite Democrats are concerned. I guess those campaign contributions and connections still have an affect.[sic]

-- James A. Fleming, Bennettsville, S.C.

Recent feedback


scorecard

Here's a "thumbs up" and "thumbs down" related to various political news items from the past week:

Thumbs up

Oscar Lovelace. The Republican candidate for governor, made the most of his opportunity on last Wednesday when Gov. Mark Sanford, his opponent, refused to debate him on statewide television and on streaming video on any home computer. Lovelace held his own by himself and took Sanford to task for not being a capable leader. Separately, Sanford was being endorsed by the S.C. Sierra Club because he is "far superior to any other candidate in protecting the quality of life in our state." Pay your money and take your choice.

Rep. Becky Martin. The Anderson Republican, speaking at a legislative debate against two opponents, pointed out she supported Sanford in 2002 for governor, but, she said, "[The governor] listens but he doesn't react. Last year, we passed [in the House] 14 of the 16 bills [he] wanted, but he takes it out on all [of the Legislature].'' She spoke her mind when she could have been quiet.

Thumbs down

Travelers. A new way to trim the federal budget is suggested by a new study from the Washington-based Center for Public Integrity, Medill News Service and American Public Media. In 2000 to 2005, South Carolina members of Congress and their staffs took $840,000 worth of free travel that was paid for by private interests. Rep. Henry Brown, R-Hanahan, and staff accounted for 12 free trips costing $11,400, while Rep. James Clyburn, D-Columbia, and staff accounted for 89 trips and $222,300. None of the others seeking re-nomination this year took any trips. If Clyburn and Brown had stayed at home and worked …

Money in politics. Already in this political year, South Carolina candidates for all offices have spent $19.3 million, only $300,000 short of the amount spent in the 2002 election cycle. And the primaries aren't even quite here, with the general election still six months away. If the state doesn't set a record, all the candidates will have to stop buying billboards (or accepting them free), television and radio commercials and newspaper advertisements. And you know that will not happen. [From "Political fund raising on road to record," The Greenville News, June 5, by Dan Hoover.]

Sanford. Thumbs down to the governor for yet another patently political public relations stunt -- hitting the road to whine about the state budget and the fact that lawmakers wouldn't let him issue vetoes before primary election day. Also, the governor gets a Bronx Cheer for his unwillingness to debate Lovelace. Wonder if he's worried about somebody criticizing his record?


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