Responding to a dip in economic growth, the Aiken Standard editorialized on July 4 that Aiken County has an “unsustainably low property tax rate.”
“The City of Aiken hasn’t raised its millage rate in two decades,” continued the editorial ex cathedra, “and Aiken County’s property tax rate remains too low compared to the rest of the state.”
Unsustainably low? By what standard?
And who caught the irony appealing for higher taxes on Independence Day?
This gratuitous slap targets past and present City and County Councilmen for holding the line on taxation since the Great Recession.
Evidently, our representatives are negligent for making local governments live within their means. Instead of raising taxes to finance the editors’ spending priorities, they remain fiscal conservatives.
Yet these elected officials live in reality, not utopia. They see many of their constituents living close to the edge, and they see struggling shopkeepers operating close to the margin.
Even objectively small tax hikes adversely impact struggling homeowners. And reducing consumer purchasing power and eliminating Aiken County’s sales tax advantage over Augusta won’t do retailers any favors.
The editorial breathlessly declared that new thinking is required: “It starts with greater revenue and higher quality school facilities. It takes money to make money.”
This elitist mentality implicitly assumes that government spending is more economically effective than individuals pursuing their own interests.
The not so subtle message is: We’ll tax and spend our way to prosperity. Trust us, we’re the experts.
But there’s nothing new here but more and bigger government.
The Holy Grail is the upcoming referendum to increase sales taxes by a penny – from 7 percent to 8 percent – to fund school construction.
The claim is that new schools will encourage economic growth and lure families to Aiken County from Columbia County. Shiny new schools will bring shiny new factories and shiny new subdivisions.
But what lies behind Aiken County’s impressive record of industrial recruitment? Is school construction really the sole factor? Or are other factors at play: a favorable business climate, fee in lieu of tax arrangements, good transportation infrastructure, and a work force with a desirable balance between skills, salaries and work ethic?
Did millions of American manufacturing jobs relocate to Mexico and China because they’re overflowing with Rhodes Scholars? This demonstrates the ultimate absurdity of such single factor arguments.
Furthermore, real educational outcomes measured in graduation rates, SAT scores and college enrollments should be the focus of concern. It’s not the age of the school that counts, but the quality of the education within.
The case can’t even be made that Columbia County is overwhelmingly preferred to Aiken County as a place to live. According to a recent study, “about 1,300 more workers commute from South Carolina to Georgia for work than the reverse.”
The contention that Aiken County is under taxed is similarly unsustainable.
There’s no “correct” millage rate. At the extremes, counties such as Horry have very low millage rates due to tourism and high property values. Others, such as Allendale, have astronomically high millage rates because of their meager tax bases.
Counties provide differing services, such as full time fire departments versus volunteer fire departments. Counties also rely on varying revenue streams. Apples-to-apples comparisons are difficult.
But when 2011 millage rates and per capita income are plotted by county, Aiken County appears normal. Statewide, high per capita incomes are correlated with low millage rates.
(For math geeks, the statistical correlation is -0.57, which is a moderately strong relationship.)
Six counties have higher per capita incomes than Aiken County, but of these only two have higher millage rates. This isn’t evidence of “unsustainably” low property taxes.
Granted, the data doesn’t provide causal connections between these two factors. Does high income imply high property values and hence lower millage rates for equivalent services? Or do low millage rates encourage economic growth and higher income?
Ultimately, these factors are likely interrelated, impacting each other in successive feedback loops.
Behind the frantic effort to raise taxes, however, lurks an impossible dream to remake Aiken County in Columbia County’s image.
Aiken County will remain Aiken County: a diverse community with horse farms and wealthy retirees, middle and working class SRS and industrial workers, rural agricultural interests, and stubborn pockets of poverty.
No community can serve as a template for another when history, demography, economics, tradition and culture differ from place to place.
In the meantime, economic downturns shouldn’t become excuses to stampede the citizenry and their representatives into enacting unwise, counterproductive tax hikes.
To encourage economic growth, less government is usually best.
Gary Bunker is a former Aiken County Councilman.