Former Trump Economist Opines On South Carolina Tax Debate

Getting your Trinity Audio player ready...

Dr. Vance Ginn is a senior fellow at the South Carolina Policy Council (SCPC) who was tapped to serve as associate director for economic policy in president Donald Trump‘s first administration. This month, Ginn sat down with FITSNews to discuss how the S.C. General Assembly can address spending in order to deliver meaningful tax relief to the citizens of the Palmetto State.

S.C. House leader Murrell Smith‘s much-vaunted tax relief plan – H.4216 – is facing serious blowback from legislators and constituents who are unhappy with the plan’s increased tax burden for middle income earners.

According to the S.C. Revenue and Fiscal Affairs (SCRFA) office’s fiscal impact statement for the bill (.pdf), a whopping 59.4% of South Carolina tax returns would see an increased tax bill totaling $938.7 million.

Facing dissipating political support, House leadership scaled back its plans to fast-track the tax “reform” legislation in order to re-calibrate their approach.

Why couldn’t Smith and his GOP allies make meaningful tax cuts in their initial bill? Because to this point, all discussions have been predicated on continuing to annually expand South Carolina’s administrative leviathan without constraint.

***

Florida: 25M people. 5,000 DOT employees.

South Carolina: 5M people. 5,500 DOT employees.

And our roads? Among the worst in the country.

This is what happens when unelected bureaucrats run the show.

— DOGE SC (@officialdogesc) April 23, 2025

***

While arch-conservatives in the S.C. General Assembly advocate taking Javier Mile‘s chainsaw to the Palmetto State’s bureaucrat-industrial complex, political reality in this ostensibly “red” state would appear to preclude such an approach from ever being seriously considered by decision-makers in Columbia.

American electoral politics incentivize ever-growing budgets for all entities which receive funds from the government. While this feature of our system of governance threatens to financially ruin the nation if not checked a the federal level, the necessity to balance budgets at the state level means doomsday deficits cannot amass.

While debilitating deficits aren’t a concern at the state level, ever-increasing spending makes true tax cuts effectively impossible.

***

FTR:
I’m in favor of cutting SC Government by half. Cut all the fat.

— April Cromer (@AprilCromerSC) April 22, 2025

***

In our conversation, Ginn advocated for zero-based budgeting – a method of appropriation wherein agencies are presumed to receive zero dollars every year and then justify all expenses to earn their budgetary allocations.

“You’re basically doing an audit of what’s happening with government, just like we do with our own budget, an annual audit that allows you to really highlight the areas that you need,” Ginn said.

Both FITSNews and the SCPC have repeatedly called out GOP leaders for ignoring state law by not applying this budgetary method year after year. Unfortunately, it seems we will have to continue to do so for the foreseeable future.

Understanding this unfortunate political reality, the bulk of Ginn’s recommendations instead focuses on capping the rate of budget growth to inflation plus growth in the state’s population. While this would allow budgets to grow year-over-year to keep pace with the influx of new residents and the ongoing devaluation of the dollar, it would prevent the relative size of the South Carolina administrative state from continually ballooning.

A graph published in the SCPC’s Path to Prosperity budget recommendation authored by Ginn illustrated how far-off the mark recent budgets have been.

***

***

Put simply, you can’t cut taxes like a Republican when you’re spending money like a Democrat. Or, in South Carolina, like a Republican.

“Instead of growing 6% or 7% per year, grow 3% or 4% that’s closer to population plus inflation, and if you do that, just slowing the growth, everything can still increase – but let’s make sure we’re spending those dollars wisely,” Ginn said, reminding lawmakers that every dollar of state appropriations “has to come out of the productive private sector.”

“What we want to see is more money in the productive private sector,” he said.

According to Ginn, and nearly every other reputable economist, more money in the private sector means “more jobs, more economic activity, more innovation, and that could also, you know, secondary effect as you have more revenue to then cut down the income taxes as quickly as possible.”

While one would assume that a GOP supermajority government wouldn’t need reminding of these elementary economic principles, the evidence suggests otherwise.

Ginn further pointed out the pitfalls of revenue-triggered tax rate reductions – as envisioned in Smith’s initial bill.

Revenue triggers lead to uncertainty as to “whether or not that tax relief is going to happen.”

***

Rep. @JosiahMagnuson told @FITSNews most S.C. taxpayers will pay "$700 to $900" more under the GOP's proposed tax "cut."

An insider admitted to Magnuson that "people aren't going to know they got hit with any tax increases in 2026, so we'll be fine for re-election." pic.twitter.com/09yFOZDxM8

— Dylan Nolan (@dnolan2000) April 1, 2025

***

Smith and his under-bosses attempted to assuage opposition to their plan with the argument that once fully implemented, it would reduce most South Carolinian’s taxes.

“Revenue comes from the dynamic economy, (from the) market economy,” Ginn said, adding that “no legislature controls the amount of revenue.”

Anybody paying attention to the news knows just how dynamic our economy has been in recent months, with the natural end of an equities bull-run coinciding with Trump’s global trade war.

If passed as originally authored, there is a grave risk that the an economic downturn could trap taxpayers in the first phase of the “tax cut” for an extended period of time – creating the potential for the state’s least wealthy taxpayers to fork over an increased portion of their income for an extended period of time.

“If revenue targets aren’t met, taxpayers are left waiting for relief that may never come,” Patrick Gleason of Americans for Tax Reform warned in a Forbes article on the Palmetto State’s new tax plan.

Ginn instead advocated for surplus triggers, which in his words “are grounded in reality.”

A surplus trigger allocates funds beyond the aforementioned population growth plus inflation to predetermined causes. In his article on the topic, Ginn suggested an allocation of 90% towards tax relief with 10% going to a rainy day fund.

Using data from the SCRFA, Ginn calculated that limiting spending to population growth plus inflation – and imposing a surplus trigger – could reduce the state’s corporate and personal income tax rates to zero by 2033, all while allowing state budgets to grow at a reasonable rate with no dramatic up-front spending cuts.

***

 

***

Ginn concludes his Path to Prosperity plan with a salient analysis of the where the Palmetto State stands on the tax reform debate.

“South Carolina can lead on tax reform—but only if it commits to spending less, taxing less and reforming with transparency,” he noted. “H. 4216, as written, would shift burdens without reducing them for most. By modeling reform on the principles of surplus triggers, priority-based budgeting and taxpayer-first simplicity, South Carolina can create a path to a zero-income tax rate.”

Ginn called on legislators to “act decisively to adopt a comprehensive reform framework built on three pillars: strict spending control, surplus-triggered income tax reductions, and a flat tax structure with deductions that prevent unintended tax hikes on working families.”

FITSNews would encourage lawmakers to review Ginn’s guide – as well as the GOP establishment’s next attempt at a tax bill – before lending their support to another trojan horse tax plan.

***

ABOUT THE AUTHOR …

(Via: Travis Bell)

Dylan Nolan is the director of special projects at FITSNews. He graduated from the Darla Moore school of business in 2021 with an accounting degree. Got a tip or story idea for Dylan? Email him here. You can also engage him socially @DNolan2000.

***

WANNA SOUND OFF?

Got something you’d like to say in response to one of our articles? Or an issue you’d like to address proactively? We have an open microphone policy! Submit your letter to the editor (or guest column) via email HERE. Got a tip for a story? CLICK HERE. Got a technical question or a glitch to report? CLICK HERE.