The Palmetto Insider

The blog of the South Carolina Policy Council

Opposition to Act 388 Still Simmering, Not Yet a Full Boil

with one comment

Local property taxes brought in $4.375 billion in revenue for FY08-2009. This is one reason property tax legislation is a controversial subject across South Carolina. Another reason is the overhaul of the property tax system (Act 388) in 2006. Act 388 has largely been deemed a failure. Most important, the act’s envisioned “tax swap” has arguably increased the overall tax burden.

Thus, discontent over Act 388 continues to simmer, especially as the weak economy has put pressure on realtors and others looking to jumpstart the commercial real estate market. Until calls for the repeal of Act 388 reach a full boil, though, legislators are unlikely to do anything more than tweak the current code.

Below is a sampling of property tax legislation introduced in 2010 – most of which died in committee. As will become clear, lawmakers shied away from fundamental reform. Likewise, the Senate chose not to pass legislation (H 4585) that would have permitted TRAC to look specifically at Act 388. (That said, the tax reform commission did publish an extensive review of property taxes and recommended reforms for those who want to study up on other property tax issues.)

Here’s a review of property tax legislation for 2010:

H 4839 (signed into law): Another example of a law written for the benefit of a very small number of taxpayers. This law clarifies that Medal of Honor winners or prisoners of war (and their spouses) are eligible for a property tax exemption, regardless of when the honor was received.

S 405 (governor’s veto overridden): This law allows watercraft to be taxed as real property, akin to homes and land.

S 976 (read twice in Senate): This bill would have allowed counties to tax property owners to pay for the cleanup of unhealthy or unsightly material.

S 983 (died in committee): This bill would have provided a property tax break for elderly persons who move to a new residence.

S 1006 (died in committee): This bill would have increased the homestead property tax exemption from $50,000 to $100,000 for persons aged 65 and over.

S 1119 (died in committee): This bill would have required property be valued at the most recent assessment, rather than the original purchase price, as regards eminent domain/takings lawsuits.

H 3480 (died in committee): Currently, fair market value is based on the appraised value of a home for tax year 2007. This bill would have changed that to 70 percent of the appraised value from 2007 – likely owing to the steep decline in home values since the beginning of the recession.

H 4179 (died in committee): This bill would have exempted improvements, that would otherwise be taxable, made to property by its owner. The exemption is aimed at unsold and unoccupied commercial structures, individual units in commercial structures, and individual units in residential structures.

H 4268 (died in committee): This bill would have capped the fair market value increase on property at 15 percent.

H 4830 (died in committee): This bill would have created another exemption for retirees. In this case, the bill exempts one vehicle from property tax for persons aged 65 and older.

H 4934 (died in committee): This resolution proposed amending the state constitution to: provide for a definition of “fair market value”; eliminate the 15 percent limit on increases in property value over 5 years; and delete an “assessable transfer of interest” as an event that changes the value of property for the purpose of levying taxes. If passed, the resolution would have been submitted to voters for approval.

H 4935 (died in committee): This bill would have made significant changes to current property tax law. Among the proposed changes would be a return to the former policy of allowing local governing bodies to increase mileage rates via a positive majority instead of a supermajority.

See the Best/Worst 2010 Property Rights Chapter for additional analysis of legislation related to private property rights.

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Written by Jameson Taylor

November 9, 2010 at 12:03 pm

Posted in Taxes

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One Response

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  1. While much has been written about Act 388 hurting school funding and business . Nothing has addressed those hurt the worst by this diaoblical law. The lower and middle income.property owners. who will susidize owners of big homes and wealthy business. In the worst depression since the 1930’s these p00r people much suffert so the very wealthy property owners can get a tax break statewide.of over $700 million over the next reassessment period.. A tax Break based on greed not need- and the P&C colors it unassable . When you place a 15% Cap on the assessed value of Legal Residences the tax burden shifts to business when you cap the assessed value of all property then the tax burden is shifted to poor property owners and those who rent- these are the real victims.

    bob henderson

    November 9, 2010 at 8:48 pm


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