News & Updates

The Post and Courier (Charleston, SC): A glaring problem with property tax relief

By Edward M. Gilbreth

In 2006, the S.C. General Assembly passed significant property tax relief legislation.

To summarize, the Legislature facilitated a decrease in property tax last year through a 1-cent increase in the state sales tax to 6 percent on the dollar. This led to an impressive reduction of tax on owner-occupied homes for school operations and, perhaps in the future, many county operations. Furthermore, lawmakers put a constitutional amendment on the ballot that resulted in a 15 percent cap on property assessments over five-year periods for qualified individuals. (See below.)

Meanwhile, taxation on certain groceries actually went down from 5 percent to 3 percent, ensuring that roughly $120 million would stay in taxpayers' wallets and out of Columbia during 2007. Overall, about $670 million in property tax relief was provided throughout the state during that fiscal year, all as a result of grass-roots efforts organized by such outfits as nohometax.org.

A companion piece of legislation limited the growth of taxation in a county to a level commensurate with population growth plus the Southeastern inflation rate. In Beaufort County last year, for example, the total increase was only 6.1 percent even though the area was exploding with growth.

There is a glaring problem. Whereas long-standing property owners get the 15 percent cap based on standard county assessment, the new property owner pays tax based on full market retail sale value. These "point of sale reassessments" can be devastatingly harsh. New owners may not understand that their tax bills could increase as much as 400 percent relative to the previous ownership.

It's probably fair to say that a substantial majority of property tax payers are still dissatisfied with their tax bills. Nearly 70 percent of all those who went to the polls in 2006 voted for relief — a veritable landslide. Every single county in the state voted for relief, and 21 of the state's 46 counties approved it in the 70 percent to 79 percent range. Many would vote for further change. Why?

In some cases, those 65 and older living on fixed incomes are still at risk for undue financial hardship, if not eviction from their own houses. We all have to ask ourselves if it's proper that any of our elderly citizens should be in that type of situation while trying to enjoy a welcomed, deserved and comfortable retirement.

Point-of-sale assessments, as stated, can be brutal to newly purchased businesses whose owners may be running the same type of operation at the same address. Yet still getting nailed for it while, in reality, the only thing different is the name on the property. It has been suggested by some that these types of tax revenue loopholes are driving real estate investors (commercial and private) out of the state, causing a lot more harm than good.

Interestingly, a new piece of legislation has been filed. H. 4784 is a revenue-neutral proposition that would permit raising the state sales tax to 7 percent, possibly generating an additional savings of 28 percent to 30 percent for ALL property owners, resident and nonresident. (The sales tax-relief bill helps only single-family homeowners.) Not only that, it would completely eliminate property tax for occupants over age 65.

Equally important, it would apply the 15 percent reassessment cap to ALL properties instead of reassessing properties when they are sold at market value. In other words, the point-of-sale reassessment would go away.

The sales tax hike affiliated with H. 4784 would not include local-option taxes, but would still be competitive with adjacent states. In Charlotte, for example, the sales tax is now 7.25 percent and going to 7.5 percent in October of this year. (This would include local-option add-ons.) The sales taxes on the border at Augusta and Savannah are 7 percent, meaning the current S.C. sales tax burden is still very competitive.

It's certainly no secret that I favor property tax relief. In case you're interested, the bill was drafted by Rep. Chip Limehouse. And don't forget to help out the folks at nohometax.org.

Time is becoming an issue.

Edward M. Gilbreth is a Charleston physician. Reach him at edwardgilbreth@comcast.net
To view the article, click here.