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Touting tax relief--Gov. Sanford comes to Orangeburg to pitch economic stimulus package

Gov. Mark Sanford, center, talks to Atsko/Sno-Seal Inc. employee Ernestine Frazier, left, as company President Kurt von Besser watches Wednesday during Sanford's stop at the Orangeburg plant. CHRISTOPHER HUFF/T&D

Gov. Mark Sanford paid a visit to Orangeburg's Atsko/Sno-Seal Inc. plant Wednesday afternoon in an effort to tout his economic stimulus package and to show support for assisting small business growth.

Following a brief tour and a meeting with company employees, Sanford noted that Atsko -- which employs about 50 -- and businesses of its nature are the target of his proposed tax plan.

"This is something we would love to see more of in all of South Carolina and that is taking a dream and a whole lot of hard work and ... perspiration, effort and persistence to build a company," Sanford told various Orangeburg residents and members of the media. "If you look at the real backbone of job creation in South Carolina, it is basically in small business."

The centerpiece of the governor's 10-point economic stimulus package announced this week is an immediate $222 million income tax relief that would lower the state's top income tax rate by 15 percent (from 7 percent to 5.9 percent) in an attempt to make the state more competitive in attracting jobs and capital investment.

In light of budget cuts, the plan also proposes raising the tax on cigarettes to the national average of 68 cents a pack and extending the sales tax to lottery tickets to fund the income tax reduction.

The package will be discussed during the legislative session beginning in January.

Orangeburg County traditionally ranks among counties with the state's highest unemployment. The rate was 10.9 percent in September.

These trends, Sanford said, are part of a greater and more disturbing trend that has plagued the state for the past four years. In particular, more than 15,000 workers have been displaced this year alone.

South Carolina ranked behind only Michigan and Massachusetts in job loss.

Citing tax rate, employment growth and business creation statistics compiled by the U.S. Bureau of Labor Statistics, U.S. Small Business Administration, Sanford said neighboring states over the past four years with no or lower income tax rates than South Carolina have seen increases in employment and business creation.

South Carolina, on the other hand, has seen a 1.96 percent or 3,629 job loss rate over the same time period.

Currently, the state has the highest income tax rate in the Southeast for the average taxpayer and the fifth highest rate in the nation.

"If every small business across South Carolina would add just one job or two jobs, this job problem and economy problem we have in South Carolina would disappear," he said. "What we cannot afford to do is to say we will wait for things to get better in the national economy. If you really look at the facts out there, one of the changes that would have biggest impact in creating jobs and spurring the economy in South Carolina is this income tax change. That is why we proposed it."

Specifically addressing Orangeburg County's unemployment woes, Sanford explained the need to examine these issues on a macro, not a micro, level. That's what his stimulus package is designed to do, the governor said.

"The big thing though is that every county is amazingly different," Sanford said. "The idea that you can come up with a special strategy for Orangeburg vs. Cherokee County is at odds with what I see from an economic standpoint."

Sanford did said the stimulus plan addresses providing market-based micro-loans to business entrepreneurs for capital leverage, engaging the state's Department of Commerce to streamline operations more effectively in small business and playing more to the state's climate and geographical benefits to attract business and retirees with expendable income.

Atsko President Kurt von Besser said the governor's proposal is heading in the "right direction."

"You don't realize how much small businesses are needed," he said, pointing toward the reliance of larger industries such as BMW and Electrolux on smaller businesses. "These people don't want to come here when you are not competitive."

In addition, lowering the income tax, Besser said, would attract more retirees to the state. They bring with them a lot of expendable income, which would also help boost the economy.

"I think the state has to be sold, but it is like a snowball, and it will take time," he said. "But I think it will be a healthier economy if we attract the small business we are missing."

As to hiking the cigarette tax to 68 cents in order to offset the 15 percent income tax reduction, Sanford acknowledged that the tax may reduce the number of smokers, which could reduce the revenues received from the tax.

The effect on reducing health care costs, he said, would tend to offset any revenue loss.

"The big issue is from a pure policy standpoint. What is indisputable is the positive economic consequence that would come with lowering of the income tax," he said. "The economic side of that equation is indisputable to what has happened in other states."

Sanford's visit to Orangeburg was the second of a three-day, 12-city tour of the state intended for presentation of tax plan package.

To receive a copy of the complete plan, contact Chris Drummond or Will Folks in the Governor's Office at 803-734-2100.

T&D Staff Writer Gene Zaleski can be reached by e-mail at gzaleski@timesanddemocrat.com or by phone at 803-533-5551.