Gov. Mark Sanford needs to stop pointing
to Florida as a role model for tax policy. A recent evaluation of taxes
in both states shows that South Carolina already is more than
competitive with the Sunshine State in regard to its tax burden.
Sanford, who is pressing state lawmakers to phase out the state's
income tax as an incentive for more entrepreneurs and retirees to move
here, is fond of pointing to Florida as an example of a state where low
tax rates have attracted new investment. And the governor is right that
Florida has no individual income tax.
But Sanford's mistake is in comparing the two state's income tax
rates out of context. Findings posted last week by a researcher with the
S.C. Board of Economic Advisors showed that while Florida may lack an
income tax, its taxes run deeper and wider than South Carolina's.
For example, Florida has a cigarette tax of 34 cents per pack,
considerably more than South Carolina's 7 cents. Florida levies a 10
percent tax on home satellite television service, which South Carolina
doesn't. Outpatient hospital services get a 1 percent tax and inpatient
services get a 1.5 percent tax in Florida, while the Palmetto State
taxes neither service.
Perhaps most significant, property taxes on a $100,000 home average
70 percent higher in Florida. And counties in Florida have more
flexibility to impose local sales taxes and fees than they do in South
Carolina.
Income tax rates can't be viewed in isolation from other taxes and
fees. In comparing the respective tax burdens of each state, we must
look at the whole picture.
But more to the point, the tax burden alone is not likely to
determine whether retirees or people hoping to start or expand a
business take a long, hard look at South Carolina. Many other variables
are likely to be just as important.
Many retirees move to Florida for the weather and the water. But they
also are attracted by such factors as an excellent health-care system,
public transportation options for the elderly, plentiful retirement
centers, a large, capable work force and a variety of educational,
recreational, cultural and entertainment opportunities.
If South Carolina wants to attract retirees -- and it seems to be
doing so at a steady rate -- it needs to concentrate on those factors,
too. And lowering income tax rates might be at odds with enhancing
lifestyle opportunities for new residents.
And if Sanford wants to attract entrepreneurs and lure business to
the state, he must ensure employers that a large group of educated and
well-trained employees will be ready to roll up their sleeves and work
for them when they arrive. And executives will be looking for many of
the same lifestyle attractions as retirees, not to mention good schools
and safe cities for their children.
This tax-rate comparison between South Carolina and Florida
highlights the futility of Sanford's myopic focus on the income tax.
What South Carolina needs is a governor with real vision, not tunnel
vision.
