Gov. Mark Sanford cruised through Rock Hill Thursday morning to
plug his plan to resuscitate South Carolina's economy -- by slashing
the state's income tax rate and replacing the lost revenue with
higher taxes on cigarettes and a new tax on lottery tickets.
If you didn't recognize him tieless in his work shirt and scuffed
work shoes amidst the workers at the construction site for First
Baptist Church, here's a hint: He was the one with the Master of
Business Administration from the University of Virginia.
Sanford's visit was part of a three-day, 12-city, "Jobs and
Growth Tour" in which he unveiled his economic stimulus plan.
And partisan politics aside, you have to give the blue-collar
wannabe from Columbia the benefit of the doubt.
Who is going to argue against cutting South Carolina's income tax
rate by 15 percent, dropping the top rate from 7 to 5.9 percent?
Most taxpayers won't.
But legislators will as they try wrestling with an expected
$300-million-plus shortfall in next year's state budget.
South Carolina's income tax rate is the highest in the South and
fifth-highest in the land for the average taxpayer. Heck, Florida
doesn't even have an income tax and they've created more than 35,000
jobs over the last four years while South Carolina had a net job
loss of more than 3,600 jobs. Of course, the Sunshine State has Walt
Disney World and we have South of the Border, but that's a mouse of
a different color.
And who besides a bunch of cigarette smokers and gamblers is
going to object to taxes on smokes and lottery tickets? The tax on a
pack of cigarettes would increase to 68 cents, the national average.
The current 7-cent tax is the fourth-lowest in the nation. Now,
there is no sales tax on lottery tickets; under the proposal, a $1
dollar lottery ticket would cost an extra nickel.
Sanford predicts the state treasury would gain $222 million in
new money to help replace the loss of state income taxes. The extra
cash in taxpayers' pockets would stimulate new job and small
business creation, Sanford said.
The longer you listen to him, the more sense he seems to
make.
"South Carolina led the nation in net job losses over the last
four years. We even led Michigan and Massachusetts. Rustbelt states
typically lead this category," said Sanford, pointing to fever
charts and placards.
Basically, a governor with an economic stimulus package is like a
cheerleader; he can encourage, but he can't make it happen on his
own. He'll take his plan to the legislature when it reconvenes in
January.
When you ask legislators, they'll mostly tell you the same thing:
Listen to Mark, give him a chance, he has an economic plan to get us
out of our monetary morass.
House Speaker David Wilkins, R-Greenville, says Sanford's
prescription could be the cure for the Palmetto's state's economic
paralysis:
"We've suffered greatly over the last four years from the
executive branch in the area of job creation," Wilkins said. "It's
still early in the process but by cutting the tax rate while
increasing cigarette and lottery taxes, the governor is heading us
in the right direction."
Earlier this year, Sanford floated a similar plan to bail out the
state's Medicaid system, the health-care system for the poor.
Medicaid advocates are now concerned Sanford wants to use the new
revenue to cut income taxes, leaving Medicaid's long-term funding
problems unresolved.
Wilkins has said it would be irresponsible to consider a
cigarette tax increase before there is substantive Medicaid
reform.
When asked about Medicaid on Thursday, Sanford said he was
committed to funding the program from general tax revenue.
Some legislators have also raised questions about the wisdom of
placing a tax on lottery tickets, which could reduce sales and hurt
the state's lottery-supported education funding. Sanford dismissed
that by saying that people who buy lottery tickets are not going to
balk at a 5 percent sales tax on tickets, and that most lottery
players in other states already pay a sales tax.
Rep. Herb Kirsh, D-Clover, has served on the Ways and Means
Committee for 19 years and has seen a lot of economic plans from a
lot of new governors.
"Partisanship has nothing to do with it. I like the governor. I
think he has some good ideas," Kirsh said. "And I'm all for reducing
our income tax rate. However I do disagree with him on several
points ..."
With the state's current budget woes, Kirsh believes the 15
percent drop in income taxes is too much too soon.
"It needs to be in stages like he first proposed it. We can't
absorb it this quickly in this economy," Kirsh said. "And I just
don't understand where's he going to find the money to pay for
Medicaid without that cigarette tax money."
Because Kirsh's district is in a border county (he lives 10 miles
from the N.C. line), he's sensitive about the impact of raising
taxes on cigarettes and lottery tickets. (Georgia has a lottery and
North Carolina has considered one.)
"I've seen what happens. If folks can buy their goods cheaper
across the state line, they'll get in their car and ride to North
Carolina," Kirsh said. "North Carolina's rate is 4 cents and ours is
7 cents. What do you think shoppers will do when the cost goes up to
68 cents in South Carolina?"
Kirsh reminds me he's no fan of cigarettes. He is a student of
microeconomics and the effect taxes have on consumer spending.
"I don't smoke. All I do is eat," he said with a laugh. "And
smokers are like anybody else, they'll go where they can buy their
product cheaper."
Dan Huntley