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Lawmakers said their property-value cap would protect people from being forced out of their homes because of rising property taxes. Mostly, though, it cuts taxes on homes in the most popular neighborhoods, and keeps bills higher on properties that aren't appreciating so fast. Grace Beahm Alford/Staff

Residential property taxes, a reader told me this week, “have the capacity to destroy families and communities in one fell swoop” because they “are based on what you could sell the house for, but you have not yet realized that gain.”

Families can’t pay their property taxes, he continued, so they have to move: “It gentrifies the neighborhood. It destroys schools, relationships and businesses. Very often, it leads to family turmoil and permanent alterations in the fabric of our community.”

He could have been channeling the homeowners who convinced the S.C. Legislature to pass Act 388, which eliminated the property taxes that homeowners had to pay to operate schools, in exchange for raising the state sales tax by a penny on the dollar. Although a tiny minority of S.C. homeowners were in fact forced to sell their homes because of high property taxes, the argument is even more overwrought today than it was in 2006, when the law was passed.

In part, that’s because Act 388 cut residential property taxes by about half. But it’s also because that complaint about property taxes being based on the assessed value of your home — that’s no longer true. It hasn’t been true since 2006, when the Legislature passed … yes, Act 388.

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Cindi Ross Scoppe

Before Act 388, counties reassessed the value of residential, business and industrial property every five years to make sure it was taxed based on its value, rather than what it had been worth when it was first purchased. That was to make sure everyone paid their fair share in property taxes. But that got upended as part of Act 388.

Today, homeowners still have to pay property taxes for county and city operations, and counties still conduct reassessment every five years. But Act 388 says that no matter how much a home’s actual value increases, its taxable value can’t increase by more than 15 percent over that five-year period, unless the property was sold.

So if your home’s value goes from $200,000 to $230,000, you pay taxes based on that new $230,000 value. If the value goes up to $280,000, you pay taxes as if it were worth that same $230,000.

That’s unfair by itself, but there’s a twist that makes it worse, and you may want to read slowly here, because this gets a little complicated: After reassessment, governments have to reduce tax rates so the total revenue they collect using the higher tax values is the same it would have been using the lower tax values. For example, if the tax rate was 100 mills and total taxable value of all property in a county increased from $1 billion to $1.1 billion, then the tax rate would have to drop to 91 mills.

But since some properties are taxed based on less than their full value, the total value of taxable property is less than the actual value of property. That means tax rates don’t get reduced as much as they otherwise would.

And that in turn means everybody who is taxed based on the full value of their property has to pay higher taxes to make up for the tax break given to the few who do benefit. Which means people who own homes in less-popular neighborhoods, along with those who own business and rental property, and even automobiles, have higher tax bills than they would have without the tax-value cap.

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The Legislature could have targeted tax relief to homeowners at risk of losing their homes — for example saying no one has to pay more than 5 percent of their income in property taxes; 30 states use such “circuit breakers” to provide targeted relief. Instead, it insisted on this broad, simplistic system that mostly benefits those of us who are quite able to pay our bills.

In the meantime, the rest of Act 388 raised the sales tax for everybody, including people who already had a hard time paying their bills. And it accelerated the starvation of our schools, which has driven up class sizes and held down pay and helped produce the extra duties and extra stress that are driving teachers from the classroom.

As lawmakers work to raise teacher pay to the national average and right a host of other wrongs in our schools, one of the things they need to do is bring homeowners back into the school-funding mix — and provide some targeted relief for those who truly wouldn’t be able to afford those property taxes.

Cindi Ross Scoppe is an editorial writer for The Post and Courier. Contact her at cscoppe@postandcourier.com or on Facebook or Twitter @CindiScoppe.

Follow Cindi Ross Scoppe on Twitter or Facebook @cindiscoppe.