Sanford’s Tax Plan Gets Some Love
Gov. Mark Sanford’s plan to cut South Carolina income taxes in half and eliminate the corporate income tax altogether (while imposing a landfill dumping fee and raising the cigarette tax) is getting some support from people who understand this stuff, specifically the Tax Foundation, a nonpartisan tax research group based in Washington, D.C.
According to the group’s analysis, if adopted as fully phased-in Sanford’s plan would take South Carolina from No. 25 to No. 6 in the nation in its tax climate, trailing only Florida among Southern states.
“That would be a sea change,” says Josh Barro, an economist with the Tax Foundation, “and (would) make the state much more attractive for business investment from a tax perspective.”
“The optional flat tax would move South Carolina from having one of the highest top income tax rates in the South to the lowest, except for Texas and Florida, which have no personal income tax at all,” the report adds.
You can read the Tax Foundation’s one-sheet analysis by clicking here.
Not surprisingly, the notion of actually investing more money in our economy – particularly at such a critical time in our state’s future – did not sit well with House Speaker Bobby Harrell, whose plan for growing our economy consists of greater government intervention.
Harrell told the Greenville News today that the House of Representatives was “not at all likely” to support Sanford’s plan.
Comments
By Silence the Noise on December 13th, 2008 at 7:22 pm
Folks are “not at all likely” to quit looking into Harrell and his shenannigans.
By Catherine on December 13th, 2008 at 8:24 pm
I love it. Cut taxes, cut taxes, cut taxes…. almost as bad a broken record as Harrell’s “transparency” claim. Answer this — WHERE will the needed make-up revenue come from? Those other states always held up as examples have drawn on other revenue sources. We don’t have that luxury — oh wait, we wouldn’t tax any luxury item (car, boat, RV tax levels at $300). When you and Sanford’s crowd have a full plan that accounts for making up the lost money, then I’ll listen.
By Chris on December 14th, 2008 at 12:32 am
Catherine – I cannot speak for everyone, but I feel my situation is fairly common. I own a small business with an average of 22 employees. Each of those employees pays taxes (income, property, sales, etc.). If I did not have any corporate taxes to pay then I could immediately hire at least 2 if not 3-4 additional employees. This would hopefully boost my revenue overall and add more tax paying people to the system – and potentially remove tax-draining people currently on public assistance (though not likely in my industry). The impact to the overall economy is not instant – hell, anything done to an economy takes years to measure the impact of, but it would be there. Florida is an unfair comparison as it generates an incredible amount of revenue from tourism and “other industries”. That said, there is no personal income tax and no property tax on cars/boats there. Let’s face reality – what we have now is not working. Going socialist – though now eminent on a national level – is the wrong direction. There is only one other option.
Now…the extremely obvious point here is that many, many companies looking for a place to build that shiney new factory are going to consider a state that does not have corporate income tax. Don’t believe me? Ask BMW – who selected Greer only after getting huge tax breaks – enough to cause a class action lawsuit from those that still had to pay taxes.
One impact, learned from BMW though, is the impact on education. Spartanburg School District 5 would have directly benefited from BMW taxes – but instead are not bringing in what they thought. Granted, they are not hurting in comparison to many of the other 80+ districts in the state, but it highlights a point. Education is the key to our future – any new companies attracted to SC will need a decent work pool. We would need to adjust revenue – probably from a +$0.01 income tax, for education. Florida has a sales tax of $0.08 in most areas.
Bottom line – increasing taxes has NEVER been the right answer to stimulate any economy. Even the Liberals are realizing that now – look at the Obama plan – biggest tax stimulus package in the history of mankind…I seriously pity a couple generations from now that are cleaning the houses of Chinese citizens to pay back that debt.
By Statesman on December 14th, 2008 at 2:27 am
I agree with Catherine on the taxes on cars, boats, and RV’s. While in NY state I paid full sales tax on my new car purchase which was about $2,400. The same purchase in SC would have been taxed at $300! However there are no property taxes on vehicles in NY. Depending on which county you live in, the increased sales tax is cheaper in NY than paying the property tax in SC after a few years. Trading new BMW’s every couple of years in SC is cheaper than buying one in SC and driving it for 5 years. People who can only afford a used car and drive it until it dies are really getting screwed. We should increase the sales tax and reduce the property tax on vehicles which is what Jim Bryan offered in the Senate years ago.
By roger on December 14th, 2008 at 3:47 am
Catherine, there is no “lost” money. The money stays in the economy where it creates jobs and grows income levels. When you say “make up revenue,” what you really mean is “what will state government have to cut?” Allow me to answer that: start with every single one of the governor’s vetoes from this last session. Then go into the Universities and start chopping the waste out of there. Elminate the Teri program (I actually thought we had done that, but am told by a former colleague in the lobby that it still exists). Those are a few places to start. Any money we have invested in that economic development mish-mash of Speaker Harrell, conferences fees for administrators, any dues to associations, and any contracted consultants, especially the public affairs guys who get paid to promote government. Those guys can get off the government dime and get a job in the private sector. Catherine, cutting taxes will not do away with necessary government functions. It will simply allow citizens more money to take care of necessary functions in their own homes. And still leave plenty left over to pay for teachers and law enforcement officers and other necessary state workers and programs.
By Chris on December 14th, 2008 at 10:50 am
“Teri Program” = Retired and still collecting a paycheck. I know dozens of them – and you could cut them all today and not know the difference other then the saved tax money. Even worse…AFTER they Teri they get hired back in “Retirement Status” where they collect both their state retirement check AND their state paycheck. Sure, outside of state government they could do this as well – but in state government they have that “You have to kill someone on the job to get fired” protection. Allows them to collect dual pay while napping in the office…and no, I am not joking – I have seen it. We just had some of the biggest agency cuts in history and you notice something…no services have actually been impacted. Yes, many agencies have to take 5-10 days unpaid furlough and many pet projects have been trimmed or cancelled. All of the core services that government is supposed to be offering to the public are unaffected though. Amazing. I bet it you double the size of the cut you would see the same thing – except (hopefully) you would start to see some of the “at will†crowd in Teri and Retired status start to get cut.
As mentioned, you cut out corporate taxes and the money is still there in the economy (without having the multi-billion dollar expense of collecting it and then giving back as a stimulus package). Each time it changes hands more taxes get collected from it – but more jobs are earned, more products sold, more companies able to stay alive. Roger is absolutely right in that the immediate cuts would only be to the state general fund and budgets of agencies. If only every tax payer could see the things some of us have seen that get millions of dollars thrown at them, they would be sick. Trust me, government could easily lose another 15 maybe even 20% without threatening to directly impact the services they are supposed to be providing to the public.
By Statesman on December 15th, 2008 at 1:40 am
I have worked for two different companies in SC over the past fifteen years. Both companies pay corporate income taxes to Delaware. I have and continue to try to convince my company to invest in SC. Neither have been interested in investing in SC because of corporate tax incentives. The state wants to give incentives for corporate headquarters and distribution. If I had access to economic incentives which the Governor has reduced, I could relocate manufacturing operations to SC. We could add up to 200 jobs in Lexington County. The Department of Commerce will tell you their hands are tied. The jobs I could move to SC would pay around $15/hr. The Gov. doesn’t want these “Low Paying” jobs.