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KIAWAH RESORT Associates owns a 16-acre parcel of undeveloped land with
beach and river access, worth $15 million. Last year, the company paid $20
in property taxes on the land. That’s right: twenty dollars.
The owner of a five-acre beachfront lot on Kiawah paid $9.60 in property
taxes.
Those examples, recently reported in The Post and Courier of Charleston, are
a bit extreme, but there are thousands of only slightly less egregious cases
across the state.
The tiny bills come courtesy of a law that was passed three decades ago to
protect farmers and foresters from rising property taxes that were
outstripping the earning potential of their land. Qualifying undeveloped
property is taxed at a below-market value that was set in 1991, based on
soil quality.
This extremely generous and grossly abused system creates the same result as
any system that allows some people to avoid paying their fair share of
taxes: Everybody else has to pay far more than they should. Take away the
agricultural designation, in Charleston County, for example, and the value
of taxable property would nearly double, which means tax rates could be cut
nearly in half and generate the same revenue.
Of course, no one would suggest eliminating the agricultural tax break. We
need to protect farming, and the break also serves the purpose of preserving
undeveloped land. But the tax break has been riddled with loopholes and
abuses from the start.
In the early 1990s, after the Lexington County assessor and The State shown
a spotlight on the abuses — which included numerous politicians who were
abusing the law to save tens of thousands of dollars in taxes — the
Legislature made its first attempt to limit the law to its intended purpose.
That reform prohibited agricultural exemptions on most timber tracts of less
than five acres and most farms of less than 10 acres.
Even this “reform” contained a giant loophole, though: It didn’t apply to
“agricultural” land that had been in the family since 1984. That begins to
explain why even today, as the S.C. farmer becomes more endangered than the
spotted owl, 260,000 properties across the state still receive this special
exemption — 45,000 more than when the reform was passed.
And that’s not the only loophole. Our favorite: Owners can use several
smaller tracts to meet the five-acre timberland minimum, no matter where
those tracts are located. That means that if the owner of the five-acre
beachfront lot on Kiawah buys three acres on Lake Murray, he might get the
same tax break on the lakefront land as well, with no requirement that it
actually be used as timberland. One tax official told The Post and Courier
that he knows of someone who buys up properties at tax sales and declares
them part of a “timber management system” to escape taxation.
This abuse has gone on too long. It’s past time for lawmakers to close these
loopholes, starting with the grandfather provision that allows thousands of
landowners to avoid property taxes simply because the land has remained in
their family. They may find that doing that broadens the property tax base
enough that it costs the state much less to provide property tax relief to
those homeowners who actually need it.
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