Small business has been the backbone of the US economy for several hundred years. The titans of today’s economy – Walmart, Amazon, and Apple – all started with an idea and a driven entrepreneur who took a great deal of risk and realized the “American Dream.”
While the COVID pandemic has seriously affected many sectors of our life and economy, it has had a disproportionate impact on small businesses. Since March of 2020, over two million small businesses have closed according to a study by the National Bureau of Economic Research (NBER). These closings will have a long-standing effect on our economy and society. The pathway forward for small businesses in South Carolina needs to include a reformed tax structure that doesn’t pick winners and losers.
COVID should make everyone consider how the government collects taxes and most importantly how it spends them – especially in times of prosperity. South Carolina has a patchwork of tax policy that is burdensome to small businesses. For example, South Carolina has the highest personal income tax rate in the southeast (which also applies to thousands of small businesses).
What do we have to show for it? The best roads? The highest-paid teachers? The best-compensated police officers and first responders? The best rural health care system? Unfortunately, the only metric we are leading in of those mentioned is the tax rate.
Tax reform is a subject that our legislature must take up. When our General Assembly returns to Columbia next week, they will be looking at almost $900 million in new tax collections in addition to over $2 BILLION in new non-recurring revenue. The time for tax reform is now!
A lower, simpler, and fairer system will grow, attract, and retain the kind of economic activity that we need in order to be competitive. An entrepreneur comparing Greenville, Nashville, Raleigh, and Austin has our states tax climate to consider when deciding on where to locate their company.
My grandfather (who survived a direct hit to his Navy ship in the North Atlantic by a German U-Boat, and went on to start a business, raise four children, put them through college, and then sell his business and retire at age 50 – with a high school diploma as his highest level of education) once told me that “a person’s true character is shown in moments of great stress.”
We will truly see the character of Columbia politicians in the coming months. Voters need to remember that this money is their money – and how our elected representatives choose to collect and spend it will shape our state for years to come.
ABOUT THE AUTHOR …
Thomas Rhodes is an entrepreneur and business owner who grew up in Summerton, S.C. He now lives in Columbia with his wife and three children.
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