By Andy Brack
Contributing Writer

For Albert Einstein, the definition of insanity was continuing to do the same thing over and over while always expecting different results.

With state lawmakers rushing toward passing property tax reform, South Carolina deserves a new definition: significantly reshaping the state’s tax structure while ignoring a whole bunch of smart people who say it is a bad idea.

As state senators take up property tax measures, following a bill that zipped through the House, they should consider more than the rowdy bunch of property tax reform zealots who want short-term pleasure at the expense of long-term pain.

Senators need to look at the overall message the state sends if it essentially replaces most residential property taxes with a 2 cent hike in sales tax.

And they need to listen a little more closely to the business community.

If the state approves property tax reform as proposed, it is going to stymie the state’s job recruitment efforts.

Sure, South Carolina would have one of the lowest property taxes in the nation. But at the same time, it would have one of the highest sales taxes in the nation at 7 cents per dollar spent.

For a state where job growth is lowest in the country, adding another disincentive for businesses to move here isn’t smart.

What are recruiters going to tell potential employers? “Move to South Carolina where we have the some of the highest sales taxes in the nation?”

For businesses, the extra 2 cents will be crippling and will raise the share of property taxes they pay from 42% of the whole to 47%, according to the South Carolina Chamber of Commerce.

The organization also says changing the tax structure would increase the tax burden on businesses by $490 million.

And who would pay that increase? Customers.

Editorial writers and businesspeople have been pounding the opinion pages about how a huge shift in the way South Carolina funds government might not be the smartest long-term solution for the state.

A sample of those statements:

“The tax reform legislation the House will debate this week helps rich school districts maintain their edge, forces the poor and middle class to pay for tax cuts for the wealthy, shifts the tax burden onto businesses, sets the state up for revenue shortfalls in years to come, and intrudes on the ability of every community in this state to decide what level of local services it will have.”

~ Editorial in The State newspaper

“This is a recipe for disaster that places an unfair burden on the business community. If businesses can’t prosper, South Carolina surely cannot.”

~ Columbia businessmen Lee Bussell and Jim Reynolds in The Myrtle Beach Sun News newspaper

“No aspect of state government needs a more thoughtful approach or more expertise than the state’s fiscal underpinning, down to the local level of government. Better to give the proposed (property tax) study commission the priority of analyzing the property tax relief measures now on the table than take a chance that its biggest job next year will be looking for solutions to this year’s bad tax mistakes.”

~ Editorial in The Georgetown Times newspaper

Let’s hope the state Senate will exercise its traditional leadership role to cool the passionate stirrings of the House.

There’s more than one way to reduce property taxes, including raising our nationally lowest cigarette tax, boosting our fourth-lowest gas tax, removing billions of dollars in sales tax exemptions, or broadening the revenue base by taxing services.

The debate shouldn’t be about how to satisfy irked homeowners; the debate should be about what is right for most South Carolinians after a long look at the whole system.

Andy Brack is the publisher of the S.C. Statehouse Report (www.statehousereport.com), a forecast of business developments in the South Carolina Legislature and state government. E-mail him at brack@statehousereport.com.

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