The Best & Worst to Come: A Review of Property Rights Legislation for 2009-2010

As we review the best and worst property rights’ legislation of 2009, it’s also time to begin to consider what ideas are likely to resurface during the 2010 session.

As our new book, Unleashing Capitalism, explains, property rights are the secret to a vibrant economy. Without individual private property rights, people would lose the incentive to work, save, and be productive participants in the economy. Yet, in the name of economic development, property rights are being threatened across the country. In Kelo v. New London(2005), the Supreme Court ruled in favor of an eminent domain taking of a private house (owned by Suzette Kelo) for a redevelopment project benefitting a private company (Pfizer). Other threats to private property include an ever-expanding nanny state that seeks to regulate everything from what we eat (cf. S 46, trans-fat ban) to what we wear (S 48, saggy pants ban) to where we talk on the phone (H 4190, cell phone ban).

Best Ideas for 2010

1)     Protecting private property: While South Carolina already has relatively strong protections against taking private property for economic uses, the recent trend of using tax dollars to fund economic development projects indicates that eminent domain takings remain a possibility. S 91, which did not make it out of committee in 2009, would limit county use of eminent domain for slum clearance and redevelopment.

2)     Making the annexation process more transparent: Annexation will continue to be an important issue in South Carolina as municipalities argue that urbanization is one of the keys to economic growth. In reality, annexation has many pros and cons. Annexation can provide greater access to municipal services but at times is used by cash-strapped cities to expand their tax base – or worse. It is thus imperative that annexation – the incorporation of smaller communities into large municipalities – is done in a transparent manner. H 3253 would improve the current annexation process by requiring a plan of services and a 30-day public notice before acting on any annexation petition.

3)     Reducing property taxes: Several bills would have scaled back burdensome property taxes. S 581 would have exempted from ad valorem taxation a home left by one spouse to another. H 3272, which passed the House and will hit the Senate floor in January, will cap point-of-sale property tax at 15 percent. But the current version of the bill excludes homes purchased in 2007 and 2008. Another bill (H 4179) pre-filed in November would exempt from property tax the value of all improvements to residential or commercial property at the time of sale.

Worst Ideas for 2010

1)     More economic development schemes: Kelo suggests that the primary threat to private property may come in the form of government-driven economic development initiatives. Instead of taking real property, economic incentives deals use tax dollars to pick winners and losers in the marketplace. Yet, few citizens pause to consider that their tax dollars are a form of private property. Read more about government-driven economic development here and here.

2)     More nanny-state initiatives: Over-regulating the use of private property is often just as bad as directly taking it. Another concern here is the overreach that occurs when government regulates activities that should properly be addressed through tort law or just plain common sense (e.g., texting while driving (H 4189)). Several nanny-state regulations up for consideration in 2010 include: a bill (H 3987, passed the House in 2009) to require permission from a homeowner’s association to discharge a firearm; a bill (H 4183) requiring child restraint seats be used on children up to age 8; and legislation (H 4190) prohibiting the use of a cell phone while driving. While some of

To read more about property rights legislation, click here.

Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation. Copyright 2009. South Carolina Policy Council Education Foundation, 1323 Pendleton Street, Columbia, South Carolina 29201.