Archived

This topic is now archived and is closed to further replies.

vicupstate

Property Taxes - Legislature considers sales tax swap

Recommended Posts

The legislature is very likely to make major reforms to the tax structure of our state next year. Powerful senators like McConnell and Leatherman are pushing it, so this will be a very promenient issue when the legislature meets in January.

The current proposal revolves around the idea of :

*Raising the state sales tax 2 or 3 cents per dollar

*Increasing the current $300 max sales tax on auto purchases

*Eliminating Auto property taxes

*Lowering the sales tax on food items down to 2 or 3 cents per dollar

*Requiring voter approval for future property tax increases

What are your thoughts on this?

Personally, I would rather see the current sales tax excemptions be eliminated rather than raising the overall rate. About $1billion could be raised by eliminating all of these exceptions. Some of the excemptions may be valid, but many were just enacted due to the political clout of the beneficiary group or industry. I think the $300 car sales tax should definitely go. It is very regressive. I oppose requiring voter approval on all tax increases. Many such increases already require voter approval. The credit worthiness and competitiveness of our cities, counties and school districts could be significantly impaired.

Berkley County residents recently received there latest tax bills and most residents saw large increases, some even doubled. The increase is due significantly to increases in the school taxes. Below is an excert from the News and Post on how an 8.8% increase in the school districts budget is being spent. Note that the majority of the increase is due to UNFUNDED mandates from the state and federal governments, or state budget cuts.

SCHOOL BUDGET BREAKDOWN

Berkeley County School District's operational budget increased by 8.8 percent from 2004 to 2005. Here are some of the most significant costs:

-- $4.2 million: State-mandated increases in teacher salaries and benefits.

-- $2.2 million: State and federal governments stopped providing funds for

41 elementary school teacher positions.

-- $1.3 million: School district restored 24 middle school teacher positions

that had been cut because of past state budget cuts.

-- $3.7 million: Teachers' salaries increased to stay competitive as a district.

-------------------------------------------------------------------------------

Share this post


Link to post
Share on other sites


I have mixed views on this.

Property taxes in my mind are essentially illegal. You pay money each year so that you can stay on what is supposedly YOUR land. And what happens when you don't pay? The government puts you in jail. Sounds more like renting to me.

The other side is that it is the primary sounrce of funding for our local schools. Perhaps its time to revanmt the entire tax structure so that schools are not solely dependent on local property taxes.

Share this post


Link to post
Share on other sites

Pickens Sales tax defeat calls legislature's plan into question

Excellent article.

I agree that the legislature is moving too fast on this issue. They have always been big on simple, quick-fix solutions, instead of strategic decisions and planning. I can easily see this turning into the legislature controlling the purse strings for every function of government below the Federal level. They have already proven themselves incompetent to handle their existing turf. We should not expand it.

Share this post


Link to post
Share on other sites

I have mixed views on this.

Property taxes in my mind are essentially illegal. You pay money each year so that you can stay on what is supposedly YOUR land. And what happens when you don't pay? The government puts you in jail. Sounds more like renting to me.

The other side is that it is the primary sounrce of funding for our local schools. Perhaps its time to revanmt the entire tax structure so that schools are not solely dependent on local property taxes.

They don't put you in jail do they? I thought they just took your property and sell it at a tax auction. Which, means you really don't own your property, you lease it from the government.

I like the idea of the sales tax, because since so much property taxes go to schools. It is just not right that property owners are paying for renters kids to go to school. Everybody should contribute.

Share this post


Link to post
Share on other sites

Your probably right. They probably don't put you in jail, but they do take what is supposedly your land, which was my point.

The real problem is that there is no real solution.

Share this post


Link to post
Share on other sites

I like the idea of the sales tax, because since so much property taxes go to schools. It is just not right that property owners are paying for renters kids to go to school. Everybody should contribute.

Don't owners of apartment complexes pay property taxes? I was under the impression that property taxes were somehow built into rental rates. Also, isn't a portion of the vehicle tax appropriated for schools?

Share this post


Link to post
Share on other sites

Don't owners of apartment complexes pay property taxes? I was under the impression that property taxes were somehow built into rental rates. Also, isn't a portion of the vehicle tax appropriated for schools?

You are indeed correct on both counts. Rental property is taxed as commercial property (6% of value compared to 4% of value for owner-occupied residences). Therefore the apartment owner pays MORE property taxes than a homeowner. Obviously, the apartment owner, in order to turn a profit includes all his costs, including property taxes, in his rent. Obviously, said owner is subject to market forces also. Just because property taxes go up, doesn't mean he can raise the rent dollar for dollar. In such cases, it comes out of the owner's pocket.

Car taxes are also based on 6% of value, (formerly 10.5%), so car owners pay MORE for schools in proportion to VALUE than homeowners.

To the extent that 'renters' are getting a free ride, it is being more than made up by the apartment owner. Plus the renter pays taxes on his car as well. If anyone is getting a 'discounted' ride, it is the homeowner.

Taxing property is completely logical and legitimate. Property owners place a burden on government for police, fire, garbage, water , sewer, etc. Those costs have to be paid. Get over it, that's life. That's why EVERY state has property taxes within it's borders. The same can't be said for income or sales taxes.

The real problem is that unlike income and sales taxes, property tax rates go up in many cases almost annually. The legislature never has to 'VOTE' to raise the sales tax or income taxes because these revenues grow naturally with inflation and with a growing ecomomy. Property taxes do not grow, because if the property was not reassessed or renovated, it does not pay any additional taxes one year to the next. That is unless the rates are increased.

Therefore, we have a situation where the legislature can spend based on growing pots of money without taking a 'vote', but local officials must go on record to raise property taxes.

Share this post


Link to post
Share on other sites

I forgot one other important point. Taxes on rental property do not receive the tax credit that is given to owner occupied property. This tax credit offsets the school taxes on the first 100,000 of value. So to an even greater degree, it is the homeowner that is given the 'free ride'.

This article from the Post & Courier illustrates the very regressive nature of the legislature's proposals. Wealthy property owners would receive much more relief than middle and lower income residents.

Tax proposals aid wealthy the most

Share this post


Link to post
Share on other sites

I seem to remember reading in the Greenville News that the idea of raising taxes by $.30 per pack of cigs, and increasing the sales tax on auto sales upward from the current ceiling of $300 were taken off the table.

Umm....why?

Raising taxes on cigs is a good thing, and a $.30 per pack increase still keeps our cig prices lower than GA & NC, so smoker would still travel to SC to save a few bucks...and add more money to our state coffers.

Also, doubling the auto sales tax to $600 max would still be less than the standard sales tax charged by neighboring states.

Two good proposals, killed for no good reason.

Share this post


Link to post
Share on other sites

I seem to remember reading in the Greenville News that the idea of raising taxes by $.30 per pack of cigs, and increasing the sales tax on auto sales upward from the current ceiling of $300 were taken off the table.

Umm....why?

Raising taxes on cigs is a good thing, and a $.30 per pack increase still keeps our cig prices lower than GA & NC, so smoker would still travel to SC to save a few bucks...and add more money to our state coffers.

Also, doubling the auto sales tax to $600 max would still be less than the standard sales tax charged by neighboring states.

Two good proposals, killed for no good reason.

Killed because of the tobacco and auto dealer lobbyists. Property taxes are more equitable than sales taxes unless food and essential clothing is exempted fom the sales tax. Otherwise, sales tax is a regressive tax that disproportionately hurts the poor through middle class. As always, the wealthy get all of the breaks.

Share this post


Link to post
Share on other sites

That article missed something though. The wealthy will always appear to get more of a tax break because they, by far, pay more taxes.

It was my understanding that this supposed sales tax increase exempted food products. I have not been following this process very well, so is that not correct?

Share this post


Link to post
Share on other sites

That article missed something though. The wealthy will always appear to get more of a tax break because they, by far, pay more taxes.

It was my understanding that this supposed sales tax increase exempted food products. I have not been following this process very well, so is that not correct?

I'm trying to remember. I think the proposal stated it would either reduce sales tax on food down to 1%, or do away with them althogether.

As for Waccamatt, the wealthy do pay a disproportionate amount of the taxes. I'm not weathly by any means, but I also have sense enough to know that the weathly are the ones who tend to employ & create new jobs. Hit them even more, and it all rolls downhill....meaning, job losses.

If you ask me, the poor don't pay enough taxes. That's why the lottery & increase taxes on cigs & alcohol are a good thing. I call them "stupid taxes". If you're stupid enough to engage in these types of activities, then you should pay. Of course, thees are also three of the easiest taxes to avoid paying, if you catch my drift.

Share this post


Link to post
Share on other sites

Whether a tax is regressive or progresive is based on whether tax in question rises PROPORTIONALLY with income. The fact that a wealthy person pays more than a midlle income or low income person does not mean it is not regressive. If the wealthy persons pays 50% more taxes, but makes 100% more income, it is still a regressive tax.

Compared to their numbers, the wealthy do pay a large share of taxes, but that is due to the fact that they also make/own a large share of the income/wealth. The fair question is what taxes do they pay in PROPORTION to their income. From everything I have seen it is the middle class that is doing the heavy lifting.

Share this post


Link to post
Share on other sites

Compared to their numbers, the wealthy do pay a large share of taxes, but that is due to the fact that they also make/own a large share of the income/wealth. The fair question is what taxes do they pay in PROPORTION to their income. From everything I have seen it is the middle class that is doing the heavy lifting.

An easy parallel can be drawn from that, simply because there are a lot more people in the middle class.

Share this post


Link to post
Share on other sites

An easy parallel can be drawn from that, simply because there are a lot more people in the middle class.

Which is why the only fair assessment is based on percentage of income paid in taxes, not the simple numbers. The lowest income workers are exempted from taxes on their income, because they have so little. The top income levels receive breaks because they are well represented in government, and can pay accountants to shelter their income. The middle class is stuck picking up the slack.

Share this post


Link to post
Share on other sites

Whether a tax is regressive or progresive is based on whether tax in question rises PROPORTIONALLY with income. The fact that a wealthy person pays more than a midlle income or low income person does not mean it is not regressive. If the wealthy persons pays 50% more taxes, but makes 100% more income, it is still a regressive tax.

Compared to their numbers, the wealthy do pay a large share of taxes, but that is due to the fact that they also make/own a large share of the income/wealth. The fair question is what taxes do they pay in PROPORTION to their income. From everything I have seen it is the middle class that is doing the heavy lifting.

So you must be in favor of the flat tax concept?

Share this post


Link to post
Share on other sites

So you must be in favor of the flat tax concept?

Nope. I think there should be a progressive aspect to taxation, because there is a minimal amount of spending that is required just to live. This minimal level of income should not be taxed at the same level as higher amounts. Doing so only makes it more difficult for people to escape poverty. A millionaire's next $1,000 should be taxed more than a teenager's first $1,000. The problem is when marginal rates get so high that they are counterproductive and discourage work and/or investment. The tax code needs to be simplified and loopholes/shelters eliminated. Doing so, would be fairer and bring in more revenue, which would allow the overall marginal rate to be lowered.

Turning back to the Property tax issue, this editorial makes a lot of sense. Other states have impact fees, it is time for SC to look to them as well. If structured correctly, such fees, or lack there of, could encourage redevelopment and density over sprawl.

Editorial on Impact fees

Share this post


Link to post
Share on other sites

Excellent editorial on the Palmetto Institute's ideas on property tax reform.

Legislature should heed Palmetto Institute's advise

Particularly interesting were these facts:

First, overall taxes are low in South Carolina, although this state ranks in the top 20 when "fees" are included. Second, the highest tax burden falls on those who can least afford it, people making $22,000 to $35,000 a year. Third, tax advantages favor this state's senior citizens. Fourth, the current property tax system favors homeowners over renters. Fifth, 75 percent of the states that have property tax relief programs do so on a means-tested basis.

Share this post


Link to post
Share on other sites

Other states have figured out how to target property tax relief

Excellent editorial. I wish they would have given more specific state examples though. The biggest push for reform is from the Coastal counties which are experiencing the highest appreciation in values. I doubt our simple minded legislature can behind this idea though.

Share this post


Link to post
Share on other sites

  • Recently Browsing   0 members

    No registered users viewing this page.