SC

Income Tax Relief: SC Moving Backward

WHERE’S THE RELIEF? Research has consistently shown that one of the keys to economic growth is the reduction or elimination of the individual income tax.  More than any other levy, this tax is directly correlated with job growth, income growth and real economic development (as opposed to the top-down “economic…

WHERE’S THE RELIEF?

Research has consistently shown that one of the keys to economic growth is the reduction or elimination of the individual income tax.  More than any other levy, this tax is directly correlated with job growth, income growth and real economic development (as opposed to the top-down “economic development” bailouts taxpayers are forced to subsidize).

Why is the income tax so inexorably linked to the health of our economy?  Because it is paid by job creators (small businesses) and consumers alike … impacting both production and consumption.

South Carolina currently assesses a 7 percent marginal income tax rate on all income above $14,250 – one of the highest, most regressive rates in America.  For years this website has been calling for the gradual phase out of this tax – which we’ve proposed to “pay for” with specific cuts in government (not to mention the economic growth generated by such a phaseout).

Unfortunately big spending “Republicans” in the S.C. General Assembly have rejected any proposal to substantively reduce the individual income tax – while S.C. Gov. Nikki Haley has offered up a mere pittance of income tax relief.

Weak, right?

This year the debate over income tax relief has done something we didn’t think was possible – it’s taken a step backward.

In her FY 2013-14 budget, Haley has proposed eliminating the state’s six percent income tax bracket on income between $11,400 and $14,250 and taxing that income at a 5 percent rate instead.  The result would save the average filer $29 in 2014 – or much less than already puny $80-100 in income tax relief she proposed in her FY 2012-13 budget.

We’re not opposed to either reduction – although as we said a year ago, infinitesimally small cuts like this aren’t going to do anything to stimulate our state’s economy.

There’s also a catch.  Haley’s proposed “tax relief” isn’t actually included in her budget – it’s in her supplemental funding “wish list.”  In other words it wouldn’t even happen unless the state’s revenue situation improves over the coming months.

That’s another step backward on this issue for Haley …

South Carolina needs broad-based income tax relief, not more tinkering around the edges of our anti-competitive tax code.  Unfortunately Haley is proposing a ridiculously small tax cut – and putting it at the bottom of her priority list.

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7 comments

hhuuhh?? December 26, 2012 at 5:24 pm

You are so silly and so reliant on people not having one bit of knowledge about income tax rates in this country.
Just because your sugar daddy Howie says something doesn’t make it so.

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Thomas December 26, 2012 at 6:05 pm

Indiana is expected to take in $464.3 million in wagering taxes from its 11 riverboat casinos during the current 2013 budget year. This reflects a 9% reduction due to expected competition from Ohio Issue 3, also known as the Four Casinos Initiative, which appeared on the November 3, 2009 ballot in Ohio as an initiated constitutional amendment, where it was approved. Issue 3 amended the Ohio Constitution to allow casinos in Cincinnati, Cleveland, Columbus and Toledo.

Time for a move in this direction, Governor.

Reply
Frank Pytel December 27, 2012 at 6:27 am

I’m sorry. I thought it was Dec. not Apr. Income tax is paid by the earner, not the employer.

Further, the most regressive tax in my opinion is the Death Tax. I can hear the cat calls. Bill Gates brats don’t need a billion each. That’s not the point. The tax on those earnings has been paid (presumably for Mr. Gates. I know I know). The point being is that the Death Tax prevents anyone from accumulating new wealth. If a picture is worth a thousand words, the term “Old Money” could be measured on the order of petabytes.

I agree with the premise of your story. Taxes are to high. I would prefer to see the poll tax return. If you really care how the country is run you should have to pay for your say.

Have a Great Day!! :) There won’t be many left with the Demlicans and Republicrats in charge.

Frank Pytel

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Statistical Literacy Needed December 27, 2012 at 6:55 am

This commentary would be funny if it weren’t so sad. Everyone must have some responsibility for helping the state–and the nation–correct its fiscal ills. The only “research” that exists on this subject is related to establishing an environment for investment. Income taxes, especially on the top 2% of wage earners, are much lower today than they have been for generations. Further tax reductions will not result in more investment–the economic climate, including the cost of borrowing, is not comparable today to what it was during the Kennedy administration (the most common research cited for this argument).
Simply put, we won’t have an improvement in the economy until tax rates are increased, with everyone paying a share of the cost of governemnt. The only question is whose taxes should go up. Everyone wants taxes raised on everyone else, and we won’t have a solution until a few leaders grow enough backbone to say that they are willing to shoulder a greater share of the load. And we know how little backbone there is in either the state legislature or the Congress.

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notagain December 27, 2012 at 7:28 am

Regardless of what the tax “rates” are, the bottom line is how much in taxes we actually pay. With all the adjustments and exclusions, SC is one of the least taxed states in the nation which makes it one of the least taxed places in the western world since the USA taxes less than most other western nations. We have a lot of problems but being overtaxed is not one of them. The numbers do not lie. Look at nearly any study of relative taxation and SC is near the bottom every time. We need to focus on better coordination of our current expenditures. For example, we spend hundreds of millions on health. Yet, we have three or four health related state agencies that do not have agreed upon goals and do not coordinate their activities. If we had decent leadership that problem would be addressed. It is not being addressed in a state with third world health statistics nor do I expect that it will be. Sorry leadership. It is the deficit in leadership that is our problem–not our tax rates.

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L I'll Be December 27, 2012 at 4:57 pm

Show me “one” small business in SC actually showing $14,000 on their schedule C or K-1?

And I will show them a place to get taxes done like at General Electric.

Reply
Frank Pytel December 28, 2012 at 6:27 am

Respectfully, if their showing 14k on their taxes, they’ve already met with the guys at GE :)

Have a Great Day!! :) There won’t be many left with the Demlicans and Republicrats in charge.

Frank Pytel

Reply

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