Gov. Mark Sanford visited businesses in North
Charleston and two other cities Monday to drum up support for his economic
stimulus plan, a proposal that includes cutting the state's income tax
rate to 5 percent from 7 percent over 15 years.
"It's something we're pushing hard, but we're not able to cross the
bridge on it in Columbia," Sanford said at Knight Press, a 25-year-old
printing company on Rivers Avenue.
Companies like Knight Press are at "a competitive disadvantage"
compared with businesses in most other states, he said. That's because
South Carolina has the second-highest income tax rate in the Southeast and
the 13th-highest in the nation, he said.
The changes he proposes would provide relief to the companies that
create the bulk of the jobs, said the governor, who also made stops at
Bose Corp.'s Blythewood plant and at ScanSource's headquarters in
Greenville.
"What we want to do is to point the rifle at tax changes that will have
an impact on the entrepreneurial world and the small-business world,"
Sanford said.
"These are the companies that need the incentive to take on additional
risk, expand their business or hire a couple of extra workers," he said.
Sanford's proposal is tied to a 53-cents-per-pack hike in the cigarette
tax.
Some House Republicans are opposed to raising any taxes, and other
lawmakers say they won't support one targeted at a minority -- smokers.
On Monday, Sanford pointed out that South Carolina workers fall into
the 7 percent tax bracket if they earn more than $12,200. By contrast,
North Carolina wage earners have to make $120,000, or nearly 10 times
more, before their pay is taxed at the Tarheel State's top rate of 8.5
percent.
Sanford said his plan would generate $875 million in additional
economic activity in South Carolina over four years. It also would mean an
additional $800 annually for a household earning $40,000, he said.
"Most notably, small businesses and individual income earners will
benefit by having more dollars to put back into their pockets," Sanford
said. "That in turn drives job growth and personal income -- two of the
keys to revenue growth in South Carolina."
Sanford provided figures suggesting that 15 states that have trimmed
income taxes have had higher growth rates in those categories.
"It's not a causal relationship; there are some correlations there," he
said. Because the cuts would be phased in over 15 years, the state's
income tax revenue would not drop below current levels, Sanford said.
During his campaign last fall, Sanford touted an ambitious plan to
abolish the state's personal income tax over 18 years.
"That's a bridge too far in these economic times," he said Monday.
Knight Press owner George Rask said a reduction in the state's personal
income tax rate would help offset his company's skyrocketing health
insurance costs.
"Every two years we have to change carriers," Rask said. "After you
sign up, they jack up the prices, and you have to shop around again."
Should the state's cigarette tax be raised by 53 cents a pack,
Sanford's projections show that the move would generate $150 million a
year, money that would go to covering Medicaid system shortfalls. South
Carolina's 7-cent-a-pack cigarette tax is the third-lowest in the nation,
and it has not been raised in 25 years.
Sanford, however, said he will veto the proposed increase if it is not
coupled with an income tax cut.