S.C. Republican gubernatorial nominee Nikki Haley is touring the Palmetto state these days telling voters that she is going to eliminate the state’s “small business income tax.”
“When we look at eliminating the small business income tax, we will give businesses cash flow and profit margins, and they will hire people,” Haley told the Charleston Post and Courier earlier this week.
Sounds good, right? After all, small businesses in South Carolina are responsible for creating over 95 percent of all Palmetto state jobs – and eliminating their income tax would be a tremendous first step in reducing the state’s 10.8 percent unemployment rate (and 19 percent underemployment rate).
There’s just one problem with Haley’s plan … there is no such thing as a “small business income tax” in South Carolina. It simply doesn’t exist.
And the last time we checked, you can’t cut a tax that doesn’t exist …
As we reported a month ago, Haley is actually proposing the elimination of the state’s corporate income tax – not the individual income tax (which is what small businesses and entrepreneurs pay).
In fact, of the 68,738 full-time employers currently doing business in South Carolina, 97.5 percent of them are small businesses. There are also 101,000 full-time self-employed South Carolinians. Obviously, most of these companies and individual income earners file individual returns, not corporate returns. That means they would get no relief under Haley’s plan – which would benefit only the largest corporations.
Obviously we’re all for cutting taxes, but as we said at the time we “hope (Haley) expands her scope and eventually proposes lowering the one tax that would actually create jobs and raise income levels in South Carolina – the individual income tax.”
A month later, however, Haley hasn’t addressed the individual income tax … but she has proposed bringing back the state’s grocery tax.
So … if South Carolina lawmakers were to enact Nikki Haley’s tax platform (i.e. the only two tax-related ideas she’s proposed), would the end result be a net tax hike? A net tax reduction? Or would it be “revenue neutral?”
Let’s look at the numbers, shall we?
According to the S.C. Department of Revenue, corporate income tax collections accounted for $268.6 million of South Carolina’s $20.3 billion budget in FY 2007-08 (the last year for which complete revenue data is available). That amounts to a grand total of 1.3 percent of the state’s record $20.8 billion budget. By comparison, individual income tax collections accounted for $2.86 billion in FY 2007-08, or 14.1 percent of the total budget. Obviously, that latter figure doesn’t include federal income taxes that helped pay for the “federal funds” portion of the state budget.
However, according to data provided to the legislatively-created S.C. Taxation Realignment Commission (TRAC), the state doled out roughly $38 million in corporate tax refunds in 2007-08 – bringing the total corporate tax revenue figure down to around $230.6 million.
That’s 1.1 percent of the state budget, people.
In 2008-09, the preliminary numbers provided to TRAC show a dramatic reduction in revenue generated by the corporate income tax ($207.2 million) but a sizable increase in tax refunds (roughly $60 million).
Put those numbers together and you’re looking at a total of $147.2 million in revenue – or seven-tenths of a percent of the state budget.
Now … how much would bringing back the grocery tax cost South Carolina taxpayers?
Well, it depends …
Haley hasn’t specified at this point whether she wants to bring back the grocery tax at its former level of 6 percent or at the 3 percent level favored by state lawmakers (and recommended by TRAC).
Assuming Haley supported the low-end 3 percent grocery tax hike, we’re looking at a cost of roughly $150-160 million to S.C. taxpayers. Assuming she supports the high-end 6 percent tax increase, however, we’re looking at anywhere from $300-350 million.
Bottom line?
At best, Haley’s plan is “revenue neutral.” At worst, it’s a $150-200 million tax increase.
What is it most assuredly not?
A tax cut for small businesses …
By FunkyChicken September 8, 2010 at 2:07 pm
Atta boy Willie! Call the whore on her lies.
By Ralph Hightower September 8, 2010 at 2:20 pm
Smoke and Mirrors. That’s all her plan is.
By Brian Frank September 8, 2010 at 2:22 pm
good work, for a change!
also…
This is RIDICULOUS!
Who can and who cant shampoo your hair, Primary sponsor, Nikki Haley! http://www.scstatehouse.gov/sess117_2007-2008/bills/3803.htm
I’m no fan of homeowner’s associations. This bill may still suck though.
Nikki Haley is the Primary Sponsor to break contracts with your home owners associations http://www.scstatehouse.gov/sess117_2007-2008/bills/4892.htm
This is TYRANNY! Probably unconstitutional
She co-sponsored a bill that would delete many SC elections! http://www.scstatehouse.gov/sess117_2007-2008/bills/3122.htm
TYRANNY!
Nikki Haley co-sponsored this: TO PROVIDE THAT MIRANDA RIGHTS
NEED NOT BE READ http://www.scstatehouse.gov/sess117_2007-2008/bills/3196.htm
Corporate/Medical TYRANNY!
H 3136 A BILL TO ENACT THE “CERVICAL CANCER PREVENTION ACT”
SO AS TO AMEND THE CODE
http://www.scstatehouse.gov/sess117_2007-2008/bills/3136.htm
2005-2006 below
Violates Fourth and Fifth Amendments. They have flashlights
She also wanted to mandate me to turn my lights on as to make it easier for an officer to search my car with his eyes if I am stopped for anything! http://www.scstatehouse.gov/sess116_2005-2006/bills/3509.htm
TYRANNY!
forcing schools to have military recruiters http://www.scstatehouse.gov/sess116_2005-2006/bills/4466.htm
TYRANNY!
mandating College kids to take yet, another course http://www.scstatehouse.gov/sess116_2005-2006/bills/4774.htm
TYRANNY!
http://www.scstatehouse.gov/sess116_2005-2006/bills/4837.htm infringing on gun rights
Somebody has some sense!
This bill was so bad, it was never even given a sub-committee hearing. http://www.scstatehouse.gov/sess116_2005-2006/bills/4929.htm
By yarrrr September 8, 2010 at 2:55 pm
Brain Frank, why are you such douche?
By Montagnard September 8, 2010 at 3:42 pm
Most of the Dept. of Revenue’s cash flow is from sales taxes, then personal income taxes, then franchise taxes. Like you say, corporate income taxes are a small portion of the total.
Most small businesses are S corporations, partnerships, or limited liability companies — all “flow through” companies whose income is reported on a Form K1 and paid on the individual tax return.
Those who are REALLY small businesses are sole proprietorship (think of your local barber shop), and these people report their business income on Schedule C of their Form 1040.
So to give a “business tax break” to “small businesses” in South Carolina would really call for a cut in the INDIVIDUAL income tax.
Reducing the C corporation (“corporate income”) tax rate will give a break to the likes of SCANA, Blue Cross/Blue Shield, BMW, Bowater, Piggly Wiggly, WestVaco, Mead Paper, International Paper, Duke Power, and other giants.
Nikki, are you listening?
By Seymour Glass September 8, 2010 at 3:50 pm
Not to defend Nikki… as I know she has no intention of actually doing what she says, but only wants every voter to think she means it… BUT… I would assume this is what she is referring to, Will:
SECTION 12-6-545. Income tax rates for pass-through trade and business income; determination of income related to personal services.
(A) As used in this section:
(1) “Active trade or business income or loss” means income or loss of an individual, estate, trust, or any other entity except those taxed or exempted from tax pursuant to Sections 12-6-530 through 12-6-550 resulting from the ownership of an interest in a pass-through business. Active trade or business income or loss does not include:
(a)(i) passive investment income as defined in Internal Revenue Code Section 1362(d) generated by a pass-through business and income of the same type regardless of the type of pass-through business generating it; and
(ii) expenses related to passive investment;
(b) capital gains and losses;
(c) payments for services referred to in Internal Revenue Code Section 707(c);
(d) amounts reasonably related to personal services. All amounts paid as compensation and all guaranteed payments for services, but not for the use of capital, as defined in Internal Revenue Code Section 707(c) are deemed to be reasonably related to personal services. In addition, if an owner of a pass-through entity who performs personal services for the entity is not paid a reasonable amount for those personal services as compensation or payments referred to in Internal Revenue Code Section 707(c), all of the owner’s income from the entity is presumed to be amounts reasonably related to personal services. For purposes of this section, amounts reasonably related to personal services include amounts reasonably related to the personal services of the owner, the owner’s spouse, and any person claimed as a dependent on the owner’s income tax return.
(2) “Pass-through businesses” mean sole proprietorships, partnerships, and “S” corporations, including limited liability companies taxed as sole proprietorships, partnerships, or “S” corporations.
(B)(1) Notwithstanding Section 12-6-510, a taxpayer may elect annually to have the income tax at the rate provided in item (2) of this subsection imposed annually on the active trade or business income received by the owner of a pass-through business. For joint returns, the election is effective for both spouses. The amount subject to tax pursuant to this section is not subject to tax pursuant to Section 12-6-510.
(2) The rate of the income tax imposed pursuant to this subsection is:
Taxable Year Beginning in Rate of Tax
2006 6.5 percent
2007 6 percent
2008 5.5 percent
after 2008 5 percent
By sick of your sikh denial September 8, 2010 at 4:18 pm
I cannot quite decide if she’s mentally incapacitated, stupid, or just a liar. I suspect all three.
By Old Bike Dude September 8, 2010 at 5:30 pm
Peeps, businesses do not “pay” taxes. Taxes are taken into consideration in the price of goods and services. So talking tax cuts for businesses is just another way of saying, “we gonna increase your net revenue so how ’bout a campaign donation”.
By Pussy Galore September 8, 2010 at 5:40 pm
Christ……way over my head!!! Let’s just get back to the basics….Selling pussy……or what Nikki does…..giving it away for FREE!!!
By eggaday September 8, 2010 at 5:54 pm
liar Sick of your sikh.
God help us all if Sanfraud in a skirt gets elected.
The way I figure it, the voting machines are already primed up and lubed good for Nimrata the Indian priestess. wonder if she got the invite to C Street with Mark yet?
By SOS September 8, 2010 at 7:20 pm
Sic sure just cannot get enough banging Darling Nikki… he’s got a sweet luv addiction with the local statehouse philly…
By Jerry September 8, 2010 at 10:37 pm
I agree with the Lesbians when they stated if she is giving away pussy they want some, too.
By Groundball September 8, 2010 at 11:54 pm
….. and Nikki is an accountant? Where did she ever work as an accountant? I thought she worked as a salesperson in her parents store …. what was the name, Exotica? Really appropriate.
By John Steinberger September 9, 2010 at 10:12 am
The way to eliminate income tax on small businesses, corporations and families is to pass the South Carolina FairTax Act. The 300 exemptions in our sales tax code is worth $3.1 Billion in revenue, more than the state collected in income taxes last year.
The other thing accomplished by the South Carolina FairTax Act is that it empowers consumers to take home 7% more of their pay. Consumers drive 70% of our economy!
By Butch September 9, 2010 at 12:16 pm
Even Monica wouldn’t snog the President for free. He gave her all kinds of gifts.
By Elizabeth September 9, 2010 at 1:17 pm
I like John’s plan!