Property tax system less fair

South Carolina lawmakers adopted yet another poorly considered tax “reform” measure two years ago that has had “unforeseen consequences.” They want to fix these consequences by making the law even worse and more unfair.

When the property tax was administered fairly in this state, everyone’s property was reassessed periodically, and all property owners paid taxes based on the fair market value of their property.

But those who owned waterfront property and other expensive homes that appreciated rapidly complained about their property taxes rising too quickly. Lawmakers, eager to be seen as responsive to the complaints of taxpayers, offered a referendum that would limit reassessments so that the value of property could increase no more than 15 percent when revalued. If a property changed hands, it would be reassessed to the purchase price.

Voters approved the referendum, thinking it would hold down property taxes.

Of course, that wasn’t the real function of the bill. It simply shifted the property tax burden off those who own waterfront property and other expensive, trendy homes. Under the new law, those people will pay taxes on only a fraction of the real value of their property.

Who takes up the burden these people shed? Everyone who owns property that doesn’t appreciate as quickly, and anyone who buys a house. These folks have to pay taxes on the full value of their property.

Usually when lawmakers adopt a quick-fix approach to tax problems, they cause more problems than they solve. This law is no exception. People aren’t buying the expensive homes because they don’t want the big tax bill that comes with the honest reassessment when the property changes hands.

Instead of recognizing they have added inherent unfairness into the tax system and scrapping the foolish law, lawmakers are working to make it worse. They want to extend the nice tax benefit they’ve given to wealthy property owners.

The House has passed a bill that will delay reassessment when property is sold until the next countywide reassessment. That way the owner of quickly appreciating property, who is already getting a nice tax break, can pass that break onto the next owner until the next reassessment.

So an inequity added to the tax system is turned into an even greater inequity. And lawmakers consider this to be fixing the problem.

Lawmakers seem to be unable to take anything other than a Band-Aid approach to tax reform, uniformly making the state’s tax system less stable and less fair. At this point, they need to do more than roll back their quick fixes. They must take a comprehensive look at the tax system and redesign it to restore stability and equity.