Property tax equalization initiative: SC Act 388 and local schools

in Voices by

By Charlie Reed

Act 388 is the law that shifted the burden of the school operating budget from the primary homeowner who pays at a 4% rate to all other property owners who pay at a 6% rate.  The result of this action caused the 6% property owners’ taxes to increase to almost three times more than the 4% property owners’ taxes.  Prior to Act 388 all property owners (4% and 6%) paid in to the school operating budget. However, even then, the 6% taxpayers paid more towards the budget than did the 4% taxpayers.

No one wants to pay higher taxes. A huge mistake was made in 2006 with the passing of Act 388.  Mistakes need to be rectified.  The 4% property owners who live here, many of whom have children or grandchildren going to school here, have seen their property taxes go down approximately 25% as a result of Act 388.  Thus, in essence the individuals who do not live here full time nor utilize the schools are being asked to pay 75% of the school operating budget.

While no one wants to see taxes go up, how moral is it to ask another class of property owners to pay for our children’s education?  This is not a shell game.  This is outright legalized thievery imposed on individuals who do not vote here, do not have children in school here and do not operate businesses here.  There is more than just the morality of the situation.  There are real economic consequences to every one of us living here that are benefitting from the current tax structure.

According to the State Property Tax Comparisons: Residential Property policy brief released in November 2009 by the nonpartisan Jim Self Center on the Future at the Strom Thurmond Institute “South Carolina’s very unusual taxation of rental and second home residential property will further erode the property tax base for all local governments.” And it will do this by:

• discouraging private investment in rental residential property, which is a necessary component of the state’s housing stock as well as an important resource for the state’s tourism industry;

• encouraging investment in low cost but owner occupied housing as an alternative to rental housing; and

• encouraging conversion of higher value second homes to primary residents and vice versa

It is now 2012 and what was predicted in 2009 has come to fruition. More than 6,000 tax payers who once paid in to the school operating budget have now chosen to become 4% property owners.  Those 6,000 tax payers pay zero (0) from their property taxes towards the school operating budget.  This translates into fewer 6% tax payers paying even higher taxes.

This situation is not sustainable. I agree with state Senator Tom Davis (R-Beaufort) when he calls for tax reform.  Act 388 should be amended so that the 4% property owners pay their fair share towards the school operating budget.  This is not asking the 4% property owners’ taxes to go up when one considers the fact that they should never have gone down in the first place.

I want my grandchildren and their children to have the opportunity to receive a superb education. The residents of South Carolina should be first in line to pay for their children’s education.