From the WSJ Opinion Archives
THE WESTERN FRONT
Palmetto Rebellion
South Carolina Republicans will cut taxes--or else.
Over the past several months Glenn McConnell, president pro tem of the South Carolina Senate, held a series of town hall meetings around the state. What he found would be a good lesson for Congress to learn as it fiddles over making tax cuts permanent. As any Palmetto State politician with a set of ears already knows, unless Republicans push through serious tax reform, the party will almost certainly take a pounding next Election Day.
The issue in South Carolina is that rapidly increasing home values--fueled by the well-to-do buying second homes and retirees heading to the coast--have driven property tax bills to a crisis point. Even when tax rates remain unchanged, a dramatic uptick in home values can push tax bills through the roof. The result is today many seniors on fixed incomes can't hold onto homes they've lived in for decades. Steep tax bills also force the poor to forgo homeownership and with it the hope of making it into the middle class. Meanwhile, middle-class homeowners struggle to pay the taxman.
It's not just South Carolina. Residents from Maine to Arizona have seen rapidly rising home values also increase their tax bills. Anger has grown in Virginia as infrastructure improvements have fueled tax assessments. In New Hampshire the taxman has lately taken to collecting a levy on the views some homeowners enjoy. California is actually ahead of the curve on this one, having solved its property tax problem in 1978 with Proposition 13, which ties tax bills to the value of a home when it's sold.
South Carolina taxpayers are incensed for another reason. Higher taxes have dramatically increased education spending while overall student enrollment has risen only slightly. One district in Richland County has seen school tax revenue skyrocket 779% since 1984, while the number of students dropped 11%, according to a study published by the South Carolina Policy Council. Average spending per pupil is now more than $9,100, up about a third from a decade ago and statewide education spending tops $6 billion, with most new dollars going to poorer districts. Voters have figured out that there's no truth to the refrain that schools are underfunded.
Taxpayers might not be so angry if they were actually getting something for their money. But depending on the yardstick used, Palmetto State schools are either dead last or near the bottom in the nation. About half of all high school students drop out. Those who graduate are turning in some of the lowest average SAT and ACT scores for any state. The public schools are so bad that parents of about one in 10 students pay their property tax bills and then pay private school tuition.
The first casualty in the tax revolt is probably Inez Tenenbaum, the state's education superintendent and the only Democrat elected statewide. She announced over the summer that she won't seek a third term and won't run for governor next year. A Rasmussen poll, commissioned by South Carolinians for Responsible Government, tells us why: Her efforts to derail a statewide voucher plan supported by Gov. Mark Sanford, a Republican, this past year likely would have doomed her. Voters favor school choice by 58% to 21%. And in a head-to-head match-up on the issue the poll found 56% would vote for the governor and only 26% for Ms. Tenenbaum. The real death knell came from self-identified liberals, 53% of whom said they support school choice.
But it was only after stories of the elderly paying more in annual taxes than they paid for their homes decades ago began circulating in the state capital that South Carolina lawmakers realized that if they did nothing, they too would get burned. Several veteran politicos told me they haven't seen this much voter outrage over a single issue in decades. So the state House and Senate now have competing proposals, with the House plan calling for a wholesale repeal of some taxes and the Senate looking to leave in place property taxes paid by some businesses. Each plan calls for making up any "lost" revenue with a two cent sales tax increase.
The compromise will likely be to cut property taxes on homes and apartment buildings, cap the taxes that remain (à la Proposition 13) with a constitutional amendment and then make sales tax hikes easier on the poor by eliminating sales taxes on groceries and abolishing the hated property tax on cars.
Regardless of the details, nearly everyone agrees that what will come out of the Legislature after it gavels back into session in January won't be a small rebate, temporary relief, tax credits or even a gradual reduction in taxes. And it will likely be signed by the governor. Across the state there is "strong, strong support to take the cost of schools off the backs of homeowners," Sen. McConnell tells me.
With every member of the House and the governor up for re-election next November and the state expecting a substantial budget surplus, Palmetto State politicians are getting the message that some Washington Republicans refuse to hear: that voters expect the GOP to deliver permanent tax relief.
Mr. Miniter is assistant editor of OpinionJournal.com. His column appears Tuesdays.
