The Three-Legged Stool:
Lowering Taxes, Guaranteeing Stability
Friends,
In the 1970s, South Carolina had lower taxes, provided core, essential quality-of-life services, and guaranteed a stable revenue base that allowed its citizens to weather periods of economic turmoil. Today, despite higher tax rates, South Carolina is proving unable to withstand the current economic crisis. We can’t place the blame solely on our tax code, but we can say that it makes the problem worse, not better. That it jeopardizes our recovery, while it could be helping.
Why did the system of our forebears work so much better than ours? Because they realized that drawing a little water from a hundred springs was more sustainable than drawing all the water from only a few wells. Their tax code relied on lower taxes spread across all three major revenue sources: income taxes, sales taxes, and property taxes. This three-legged stool made sure that a downturn in one particular area didn’t cause the whole to topple over. What do we do today?
1. We tax the income of an unusually small group (we entirely exempt 41% of South Carolinians – they pay ZERO dollars) at an unusually high rate (higher even than Massachusetts!).
2. We collect 6% in sales taxes – 33% higher than in 1984 – while exempting over 200 goods and services – we exempt more than we collect! Charging those who do pay twice as much as we need to collect the same amount of revenue.
3. With Act 388, we cut almost all residential property taxes (costing the state $585 million), forcing our local businesses to pay hundreds of millions dollars more than they did 5 years ago. Any wonder they’re struggling? Any wonder we’re losing, not creating, jobs?
If we lowered tax rates across the board and simply widened the base, removing most exemptions, we could help return prosperity to our great state. For the free market to work, we must ensure that all citizens and business are treated fairly and equally. Continuing to favor some at the expense of others doesn’t just violate our sense of right and wrong, it’s plain bad economics that hurts our state.
We have to tell our legislature to restore sanity to our complex, outdated, piecemeal tax code. We have to keep up the fight – we have to insist that tax reform ALL THREE LEGS of our tax code. A few minor tweaks here and there is nothing more than political window dressing – without a comprehensive overhaul, we’ll keeping teetering on the edge of collapse. That’s why we have to keep ROARing.
