Act 388 shifted the burden of the school operating budget from primary homeowners, who pay at a 4 percent assessment rate, to second-home owners, who pay at a 6 percent rate, as well as commercial property owners.
As a result, property taxes for 6-percent owners are almost three times more than taxes for 4-percent owners.
Before Act 388 all property owners (4 percent and 6 percent ) paid in to the school operating budget. Even then, 6-percent taxpayers paid more toward operations than did the 4-percent taxpayers.
No one wants to pay higher taxes. A huge mistake was made in 2006 with the passage of this law. Mistakes need to be rectified. The 4-percent 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 percent. Individuals who do not live here full time and who do not use the schools are being asked to pay 75 percent 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 who are benefiting from the current tax structure.
According to the policy brief "State Property Tax Comparisons: Residential Property," 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:
It is now 2012, and what was predicted in 2009 has come to fruition. More than 6,000 taxpayers who once paid in to the school operating budget have now chosen to become 4-percent property owners, according to the Beaufort County Assessor's Office. Those 6,000 taxpayers pay no property taxes toward the school operating budget. This translates to fewer 6-percent taxpayers paying even higher taxes.
This situation is not sustainable. I agree with state Sen. Tom Davis when he calls for tax reform. Act 388 should be amended so that the 4-percent property owners pay their fair share toward the school operating budget.
This is not asking the 4-percent 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 receive a superb education. The residents of South Carolina should be first in line to pay for their children's education.
Charlie Reed is a Hilton Head Island Realtor and a member of the advisory board for the Property Tax Equalization Initiative.