Posted on Tue, Jan. 25, 2005


State can’t afford, and doesn’t need, income tax cut



IT’S EASY TO GET drawn in by Gov. Mark Sanford’s proposal to reduce income taxes. Yes, we’ve got unmet needs in this state, you might say, but to hear supporters talk, cutting our top tax rate is the only way out of the lingering recession. Leave the rate where it is, and our unemployment rates are going to remain among the highest in the country; business owners will be detouring through Tennessee on their way from New York to Florida just to avoid so much as driving through a state with such repressive taxes.

Besides, it would only cost $6 million — out of a nearly $6 billion budget.

Some perspective is in order.

Six million dollars is the first-year cost; it increases every year, as the tax cut is phased in — jumping ten-fold next year, and then doubling the next. By the time the tax cut is fully implemented, in 2015, it will cost $959 million. That means the money the government has to spend on schools and prisons and other needs will be 13 percent less than if the tax hadn’t been cut.

And that’s if the projections are right. During the few seconds of what passed for debate at last week’s House Ways and Means Committee meeting, before resigning herself to the fact that what she said “ain’t gonna change nobody’s mind in here no way,” Rep. Gilda Cobb-Hunter reminded her colleagues that they had been assured in 1995 that their residential property tax cut would cost no more than $195 million a year. Today it costs $249 million a year — and the only reason it’s that low is that the Legislature had the sense to go back and cap the tax break when, after just three years, it had already grown by 25 percent. Another property tax break, which wasn’t capped, has grown from $47 million to $162 million over the same period.

Of course, the same thing happens with many programs the government provides: They end up costing more than anyone expected. The difference, as we have painfully seen during the recent recession, is that when times get bad, government programs get their budgets cut; tax cuts are forever.

Cost should never be the only consideration in government. Just as it would be smart to invest enough money to provide all our children with a shot at a decent education, even if doing so were painful, it would make sense to find a way to lower our income tax if it really was so burdensome as to scare off investment.

It’s not.

Because of the way it is calculated, our income tax looks higher than it is. When you plug in the exemptions and deductions that real people take, and do the same for other states, ours lands in the middle of the pack, even near the bottom under some calculations.

Change the way the income tax is calculated, so the rates on paper more accurately reflect the rates charged, if you will. That, along with a reassessment of our entire tax code, is long overdue; such a reassessment might even lead to lower income tax rates — coupled with higher rates on some other tax.

But as long as we can’t find the money to operate the homework centers and summer school programs we need to help catch up kids who have trouble learning, as long as we can’t keep enough guards in our prisons to keep the ever-growing inmate population in check, as long as we have people with severe developmental and mental disabilities who can’t get the services that we’re required by law to provide them, we have no business reducing the amount of money available to run the government. And that’s what this bill would do.





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