During the last economic crisis, Columbia, South Carolina, was known as the “Face of Recession”. How will this go during the current economic malaise? Not very well … unless its leaders decide to rethink the city’s anti-competitive tax climate.
And more importantly … unless they address the reasons why their tax climate has become so pernicious.
On the weekend, Chris Trainor of O (Columbia, SC) State newspaper reported the results of a new analysis (.pdf) prepared for the city by Rebecca Gunnlaugsson – director at Acuitas Economy.
Readers of this medium will remember Gunnlaugsson as the economist who destroyed the confused economic hypotheses associated with the governor Henry McMasterrecent boondoggle offer for liberal billionaire David Tepper, owner of the National Football League (NFL) ‘s Carolina Panthers.
The former SC Commerce Department employee knows his stuff …
According to Gunnlaugsson, the capital of South Carolina has a punitively high commercial property tax rate (among other anti-competitive rates) – twice as high as Charleston and 1.5 times as high as Greenville.
“Columbia’s commercial property tax rate equals 3.2% of the value of the property being assessed, making it one of the highest rates in the country,” noted Gunnlaugsson’s study. “Under these conditions, companies are more likely to settle elsewhere.”
This is exactly what is happening … As evidenced by the stagnant growth of Columbia’s population (including its working-age population). While Greenville and Charleston saw their populations explode by 19 percent and 14 percent over the past decade, respectively, Columbia’s growth has reached an anemic pace 0.7 percent.
Columbia also saw its population of citizens aged 25 to 54 rise only 2.5 percent in the last decade – compared to 15 percent to Charleston, 33 percent to Greenville and 64 percent to Rock Hill.
What is causing this economic lethargy?
In addition to its punitively high taxes, Columbia is battling the oppressive burden of the multitude of local governments converging on the capital – bringing with them its own anti-competitive tax burdens.
And duplicated bureaucracies …
Richland County, for example, has a property tax rate 2.1 times higher than Charleston County and 1.9 times higher than Greenville County. Meanwhile, the Richland County school district scandal – which operates most schools in downtown Columbia – has a millage rate 1.8 times that of Charleston and 1.5 times that of Greenville.
The result? Inflated tax bills for city residents …
(Click to view)
(Via: Text)
“The City of Columbia property tax on owner-occupied dwellings is significantly higher than all other similar markets,” noted Gunnlaugsson’s report. “The biggest factor contributing to the level is Richland County’s millage rate, outpacing the peers by a substantial amount.”
Residential apartment unit taxes are also much higher in Columbia, SC than in Charleston or Greenville – on average $ 6,524 per unit.
The damaging effects of Columbia’s exorbitant tax rates are compounded by the state’s anti-competitive industrial property tax rate – a 10.5 percent assessment that stifles job growth (unless you work for one of the “selected” corporations that receive controversial crony capitalist contributions).
And let’s not forget the state’s individual income tax and extremely high sales tax rates … the latter of which is routinely subject to local increases (including Richland County’s famous “penny tax” scam). 2012).
No wonder this city is not competitive …
Of course, we have talked a lot for years.
“The combination of lower rents and higher tax rates depresses the profitability of commercial real estate, pushes down the value of projects that developers are willing to undertake and even prevents any investment from taking place,” noted Gunnlaugsson.
She also pointed out that continued involvement in fellow capitalist misfortunes – like Bull Street’s notorious boondoggle – is not the answer.
“Selective tax incentives for specific developers have not fueled and will not fuel the continued, broad-based growth that the city needs,” wrote Gunnlaugsson. “Instead, it will continue to generate a greater imbalance in tax rates between some selected properties and all others, although it does not deliver on the promise of new jobs, rising wages and increasing future development.”
“The problem with these incentives is that they fail to provide long-term sustainable development for ALL types of investment and all sizes,” added Gunnlaugsson. “A consistent lower rate across all properties would reduce uncertainty, encourage investment and, ultimately, pay for itself with increased growth and valuations.”
Amen for that …
In fact, the need for competitive tax rates is particularly pronounced, given the economic conditions that arose with the coronavirus pandemic and its accompanying social reconfigurations – including the growing exodus from major metropolitan areas and the rise of the “work at home” model .
“As the work at home phenomenon becomes a permanent part of the business landscape, South Carolina will have to start rethinking its approach to economic development,” economist at the University of South Carolina Joseph Von Nessen said earlier this year.
In fact, South Carolina should have rethought its approach to economic development years ago as it became painfully clear to what extent capitalist donations of compadres and policies of fiscal and liberal spending were materially hampering growth and prosperity in the state of Palmetto.
State and local leaders have failed to do so … and our citizens are now paying the price.
We wonder … will the creation of a competitive tax climate be top of the South Carolina “business community” agenda this year?
Unfortunately, our readers already know the answer to that question …
-FITSNews
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