IT MADE SENSE for the Legislature to try to stimulate investment
after the federal government shut down military bases in Charleston
and Horry counties and made major cutbacks at the Savannah River
Site in Aiken County in the mid-90s.
What doesn’t make sense is that the stimulus package — tax breaks
for new investment, along with a special annual appropriation to the
three counties — is still operating a decade later, even though the
lost jobs have been more than made up for, and the counties are
among our state’s most prosperous.
What makes even less sense is that the tax breaks go not just
where the federal jobs were lost, but to 27 of the state’s 46
counties.
It’s not even clear that the tax breaks were targeted well enough
in the three affected counties to be a wise investment at the time.
Many, including state Revenue Director Burnie Maybank, believe
companies that had already planned to invest took advantage of the
tax breaks. But as The State’s Jeff Stensland reported last month,
there’s no way to know for sure, because Mr. Maybank’s agency isn’t
allowed to say which companies claim the $29 million a year in tax
credits created under the Economic Impact Zone Act of 1995.
Unfortunately, there’s nothing surprising or out of the ordinary
about any of this. Rather, it reflects the normal way of doing
business at the State House, where tax breaks are the standard
answer to just about any problem, where programs designed to address
an immediate problem linger on long after the problem has been
solved and where it is nearly impossible to target our limited
resources to the areas of greatest need, because lawmakers in other
parts of the state jealously demand that their areas get a piece of
the pie as well.
As outrageous as the 1995 boondoggle is, it’s just one example of
tax breaks that either didn’t make sense to begin with or no longer
make sense. Some senseless tax breaks are well-known — the $300 cap
on the sales tax on cars is the most obvious — but many more are
known only to those who benefit from them.
That’s one of the things that legislators should be looking at as
they search for ways to reduce property taxes. And there is some
talk of eliminating some of the sales tax exemptions. But there’s no
appetite for the larger discussion of whether our long list of
income tax breaks and property tax breaks makes sense.
And so the businesses that can’t take advantage of the 1995 tax
break have to pay more in taxes or else get less in government
services than they would if that law had been targeted, as it should
have been. Individuals and businesses pay higher taxes and get fewer
teachers in the classrooms and troopers on the highways and other
government services than they would if we didn’t have all the other
tax breaks that serve only narrow interests, and not the interests
of the state.
That’s the type of thing that ought to have people outraged — and
demanding change. They should be demanding that legislators shut
down the tax break that has accomplished its goal. Then legislators
need to review the rest of the tax breaks, and do away with every
one that doesn’t address a real need our state has. Do that, and
you’re well on the way to creating a tax system that will provide
enough money to pay for the services that we agree we need, and do
so in a way that doesn’t create an unfair burden on any segment of
society.
