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Nikki Haley Wants Massive Tax Swap




|| By FITSNEWS || During her first term as governor of South Carolina, Nikki Haley advanced a fiscally liberal agenda on taxesspendingeducation and (most notably) government-subsidized health care … but she never specifically proposed raising taxes.

Until now …

Haley – who previously vowed to veto any gas tax increase – now wants to raise the state’s 16.75-cent levy on fuel by ten cents (a sixty percent increase) and dedicate the revenues exclusively to infrastructure improvements.  According to her office, that would bring in an estimated $3 billion over the next decade.  In conjunction with the gas tax hike, Haley wants to gradually reduce the state’s top marginal income tax rate over the next decade from seven to five percent (a thirty percent decrease).

The individual income tax is the levy paid by most small businesses in South Carolina – and Haley claims her plan would result in $8.5 billion in savings for them and individual taxpayers (making her plan a net tax reduction of $5.5 billion over the next ten years).

Assuming you believe her numbers … (we don’t).

In addition to the tax swap, Haley demanded “reform” of the S.C. Department of Transportation – an agency she’s been in charge of for the last five years (and which was supposed to have been “reformed” under her predecessor, Mark Sanford).

“I hope everyone listened carefully to what I said,” Haley told legislators during her 2015 State of the State speech.  “This is a three-part package deal. In order to get my signature on any gas tax increase, we need to restructure the DOT, and we need to cut our state income tax by two percent.”

Haley claimed her plan would represent “one of the largest tax cuts in South Carolina history.”

But would it?

Real reformers were highly skeptical upon hearing Haley’s proposal.

“Folks are pretty upset,” the state director of Americans for Prosperity told The (Charleston, S.C.) Post and Courier. “They really feel misled. I think there’s going to be a lot of opposition.”

We agree …



“It sounds like voodoo economics from an intern,” said S.C. Policy Council president Ashley Landess – whose organization has long advocated for broad-based tax cuts, not tax swaps.

According to Landess, “tax swaps don’t work even when the money is traded in the same year – much less this (nonsense).”

She specifically referred us to Act 388 – a disastrous property tax-sales tax swap approved by state lawmakers in 2006.  That deal exchanged temporary relief on property tax rates in exchange for permanent higher sales taxes as well as additional property taxes on businesses, second homes, and industrial and manufacturing properties.

“The net result of ‘tax swaps’ is ALWAYS a net increase in burden because the goal is not to cut taxes overall as it should be,” Landess told FITS.

We agree …

“If gas prices spike, then revenue will drop,” Landess added.  “What then? Doubt they’ll be cutting income taxes in (the fourth year) in that scenario if they’re basing all this on revenue.  These projections just aren’t all that reliable.”

We agree …

Haley’s plan – which would reduce income tax rates by one-fifth of one percent each year – stands in stark contrast to the tax cut proposal offered last year by S.C. Sen. Katrina Shealy.  Under Shealy’s plan, the individual income tax would be eliminated over a five-year period – which amounts to 1.4 percent annual reduction in the oppressive levy.

That’s seven times the annual tax relief Haley is proposing …

Also, Shealy’s plan wouldn’t raise any other taxes – making it a pure tax cut (one that would stimulate the state’s consumer economy and create jobs, as opposed to relying on botched government efforts to purchase them).

Earlier this year, Haley’s “Republican” allies in the S.C. General Assembly unveiled their own tax swap plan.  We panned it … just as we are now panning Haley’s.

South Carolina does have an infrastructure problem, don’t get us wrong – but the problem isn’t due to a lack of revenue, it’s due to the fact Haley and state lawmakers have been growing government in all the wrong places.

Last week we wrote a lengthy column addressing this issue in more detail.   In light of Haley’s proposal, we would call your attention to the final few graphs of that piece …

Look: Infrastructure IS a core function of government.  And there clearly ARE critical infrastructure needs in South Carolina.  And the failure of our “Republican” leaders to address those needs IS costing motorists money.

But leaders need to address these issues by cutting unnecessary government – including unnecessary transportation projects.  Not by perpetuating the very system that’s landed us in this mess.

“While the Palmetto State’s roads and bridges crumble, its lawmakers continue to pass record-setting budgets,” we wrote earlier this month.  “Included therein?  Billions of dollars for South Carolina’s worst-in-the-nation government-run school system, its duplicative and inefficient higher education system, bailouts for wealthy corporations, shady ‘economic development‘ deals and … lest we forget … dozens of exorbitantly expensive and totally unnecessary highway projects.”

There’s plenty of money to make infrastructure a priority in South Carolina … our leaders are simply choosing not to.

Exactly …

South Carolina doesn’t need more tax swap gimmicks.  It needs real, long-overdue tax relief.  And real, long-overdue prioritization of government spending.  Neither Haley nor her “Republican” allies in the state legislature are offering anything resembling that right now.