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We’re glad to see that S.C. Gov. Mark Sanford has decided to dust off some of his 2002 tax policy ideas by way of providing the framework for his current plans, and we certainly commend him for the focus he’s brought to a long-overdue conversation about reforming our state’s utterly nonsensical tax code.

After all, South Carolina’s echo chamber could have very easily stumbled into a ridiculous discussion about what taxes and fees we should increase during this economic downturn had Sanford not used his bully pulpit to drive the discussion toward something that might actually grow our economy.

Yet while the love is flowing from some circles, we must withhold our endorsement.

How come? Well, we frankly don’t think the governor went far enough in terms of creating an environment for long-term competitiveness in this state.

Certainly, some credit is due.

This plan is a noticeable improvement from the quivering mass of revenue neutrality and political expediency that his previous, Ed Sellers-inspired tax proposals embodied, but Sanford’s current tax reform package still plays a little too cute with Columbia’s insider, tax-and-spend establishment for our liking.

So what should we do?

First things first … we shouldn’t just cut – we should eliminate both the corporate and personal income taxes in South Carolina.

Forget indexing brackets for inflation or trading exemptions for a flat tax, both of these anti-business levies should be done away with entirely – and sooner rather than later.

In fact, there’s no reason that South Carolina can’t start right now shaving a percentage point off of its top marginal rate each year – thus doing away with the individual income tax entirely in seven years time.

Oh, and remember, everybody in South Carolina pays the top marginal rate – from burger flippers to billionaire Roger Milliken.

Obviously, our state’s communist Board of Economic Advisors (BEA) will tell you we can’t afford to do that, and Pippi Wrongstockings over at La Socialista will give you some analogy about a “three-legged stool” and how we need to keep all of those legs attached to it, but here’s the straight dope, people:

We can’t afford not to do this, and the last time we checked, South Carolina was a state, not a stool.

So having established that we’re dealing with a multi-billion dollar economy and not a piece of furniture, what do we mean when we say South Carolina can’t afford not to do this?

Well, in case you don’t read fortune cookies, “within every crisis there is opportunity,” people.

Don’t believe us? Consider the dramatically different situations currently being faced by four of our nation’s largest states.

We wrote just last week about California, which is facing what Gov. Arnold Schwarzenegger called “fiscal Armageddon.” Already in the hole $14.8 billion this year, the state is staring down a $27 billion deficit next year – i.e. nearly 25% of its general fund.

Not surprisingly, California’s credit rating is in jeopardy of being downgraded, and Schwarzenegger says the state will run out of cash in February without a federal bailout.

What’s California’s income tax rate?

At 10.3%, it’s the highest in the nation, and everyone making more than $44,000 pays a whopping 9.3% rate.

In New York, things aren’t much better. The state is looking at a $12.5 billion deficit next year – or more than 20% of its general fund.

What’s New York’s income tax rate? It’s 8.14%, to which Big Apple residents must add 4% – meaning when you throw in federal income taxes some New Yorkers are giving away nearly half of their income to various governments.

Conversely, the state of Texas has no personal income tax, and yet it is better positioned than practically every other state in the country when it comes to handling the current economic recession.

From October 2007 to October 2008, Texas created a net of 250,000 new jobs. The state’s unemployment rate is almost a full percentage point below the national average, and Texas is home to more Fortune 500 headquarters than any other state in the nation.

“Texas has created a business friendly environment where 1,000 people a day move to our state to work and raise a family,” Gov. Rick Perry said at a meeting with that state’s industry leaders earlier this month.

Similarly in Florida, the budget crisis isn’t nearly as bad as it could be. The state faces a $4.6 billion shortfall next year, but that’s only 8.6% of its general fund.

By contrast, South Carolina has already had to shave over 14% off of its current budget, and is facing another 10% cut next year.

Obviously, we’re not saying eliminating our income tax is a “silver bullet,” but we are saying it would help.

Not only would South Carolinians have more money to invest in the economy, but we would be flinging open our doors to new jobs and new capital investment at a time when other states are sending precisely the opposite message.

We can also say that phasing out the income tax (starting this year) beats the hell out of the “Republican” leadership’s plan for our state, which is basically to filter more money into our research universities despite the fact they’re already getting a much larger slice of our state pie than they should – and doing absolutely nothing in terms of job creation and attracting investment.

Stay tuned … we’ll have more proposals like this one over the coming days and weeks as we seek to chart a competitive course for our state against an increasingly depressing economic backdrop.

UPDATE – Oh hey whaddya know, New York Gov. David Patterson just proposed $4 billion in new taxes and fees up in the Empire State.