State May Reduce Enormous Property Tax on Airplanes

South Carolina, trying desperately to squeeze every possible dollar out of "rich" airplane owners, managed to do something completely different: squeeze the planes out of South Carolina.

In a Karen Addy story in the Beaufort (SC) Gazette, we've learned that, "Sen. Wes Hayes, R-Rock Hill, says counties that share a border with North Carolina and Georgia are missing out on significant revenue thanks to the 10.5 percent assessment rate on aircraft. He said that in York County, for example, most pilots and businesses keep their planes in nearby North Carolina, where aircraft taxes are two and a half times lower." [Of course, taxes can't be "two and a half times lower" (ONE time lower would be free), but you get the idea --ed.]

One Senator Gets It:

Hayes (right) has the idea, though: the more you tax something, the more you drive it away. "We're charging (10.5 %) on nothing," he told the paper. "Plus, we lose the hangar rental, the gasoline sales and potentially the businesses that go with these planes. It puts us at a competitive disadvantage."

The state has two criteria designed to capture the tax, and it looks like some airplane owners have figured out how to turn those criteria around. The state hits owners with that 10.5% property tax, if the owner lives in the state; or if the plane is located in the state on January 1 of any given year. What seems to have happened, is that a lot of the aircraft are out of state over New Year's.

Sen. Scott Richardson, R-Hilton Head Island, pointed out that his state taxes boats at the same rate, eith the same result: "Here in Hilton Head you can go through any marina and 90 percent of the boats are registered in Maryland, Delaware, Bermuda... The bottom line is that our property taxes are so high that virtually no boats and planes are registered in South Carolina."

A lot of airplanes, legislators found, are based in South Carolina, yet somehow owned by LLCs in Deleware -- limited liability corporations that are themselves -- surprise -- owned by South Carolinians.

Florida and Delaware are the closest states with no property taxes. The trick for South Carolina is to find a tax rate that is low enough to be worth the hassle of owners' staying on the thin edge of the law. Some, who still favor extracting as much tax as possible from the remaining owners, use that argument to keep taxes high -- that any amount of hassle will drive so many into other states, that it's a better idea to just fleece the poor jokers who will stay, at any price.

FMI: www.lpitr.state.sc.us