By Howard Duvall
On November 7, South Carolinians will have the chance to vote on a state constitutional amendment concerning capping property values.
"Wow," the voter will say. "I have an opportunity to limit my property taxes! I better vote 'Yes' on this amendment!"
Well, this may not be the deal you think it is!
The official explanation for Ballot Question 4 reads like this:
This amendment will limit increases in the value of a parcel of real property for purposes of imposing the property tax to no more than fifteen percent every five years after the current value of the property has been adjusted: (1) to reflect improvements made to the parcel; (2) to reflect a decline in the value of the parcel; and (3) to reflect the value of the parcel when ownership of the property changes as the General Assembly by law defines such changes.
Several studies warn capping the appraised value of property to an increase of 15 percent over five years will result in higher taxes for most taxpayers. This artificial cap causes a tax liability shift from rapidly increasing properties to those that do not increase in value as fast.
In plain language, the burden will shift from the higher income taxpayer to the lower income taxpayer. This means two out of every three taxpayers could actually end up with higher taxes if this amendment passes.
A homeowner won't even see the benefit of this break unless his home is worth more than $200,000. Renters won't see any benefit at all. In fact, rent will likely go up because landlords will just pass on the increased tax burden to the renter.
A study by Miley, Gallo and Associates completed in March 2006 shows $7.2 billion in taxable value will be shifted in Beaufort, Berkeley, Florence and Richland counties alone. A study by the Strom Thurmond Institute on a 15 percent cap in Beaufort County states, "The higher rollback millage after capped reassessment means that many property owners will see a higher tax bill than they would have after conventional reassessment." The chairman of the Greenville County Council says 62 percent of the properties in Greenville County will see an increase caused by the reassessment cap if this amendment passes.
Why do these studies show that two out of three property owners will pay more taxes under the proposed 15 percent capped reassessment? Local governments are required by current state law to roll back their tax rates after each reassessment so that they collect the same amount of revenue to provide services. Protecting higher valued properties from an increase in tax value will result in a higher than necessary tax rate on all other properties. In addition to homes, this includes automobiles, motorcycles, pickups and all other forms of personal property.
Compounding the problem, business owners will be hit with a double whammy - higher property taxes and higher sales taxes without the benefit of any rollback in school taxes. These costs will be passed to the consumer in the form of higher prices for goods and services.
So before you go to the polls on November 7, think about your personal tax situation. Are you the one taxpayer out of three who will benefit from this amendment, or will you be like most South Carolina taxpayers and end up picking up the slack?
For more information about this topic, visit: The Strom Thurmond Institute's "The Fiscal Impact of a 15 Percent Reassessment Cap in Beaufort County, SC" http://www.strom.clemson.edu/publications/saltzman/15pctcap.pdf
The Miley, Gallo & Associates Study, "A Preliminary Analysis of the Fiscal Impacts of Alternative Reassessment Cap Proposals" http://www.masc.sc/resources/miley %20report%20fina%200806l.pdf