EDITORIAL
S.C. Class
Warfare? Sanford should broaden
tax-cut plan's appeal
The politics of resentment is a powerful force in South Carolina.
So S.C. Sen Brad Hutto, D-Orangeburg, probably scored some points
last week against Gov. Mark Sanford's proposal to buy down the state
income tax with a 30-cents-per-pack increase in the cigarette
tax.
Instead of an undeserved tax break for upper-income South
Carolinians, Hutto said, the state should apply any added
cigarette-tax revenue toward health-insurance coverage for working
people. Thus does the senator revive an idea pitched this fall by
Sanford's unsuccessful Democratic opponent Nov. 7, Sen. Tommy Moore
of Clearwater.
It was an idea we (and many others) liked. But Sanford's
libertarian outlook, shared by many S.C. residents, doesn't allow
for massive new programs financed with tax increases. Sanford has
said many times he will only accept a tax increase accompanied by an
equal or greater decrease in some other tax.
Since taking office in 2003, he also has pitched, many times and
in many forms, reducing S.C. income tax rates. Slashing the income
tax, he says, would stimulate private investment in the state - a
necessary precursor to the creation of high-pay knowledge-economy
jobs.
The problem with this proposal is its inherent regressiveness. A
rate reduction would benefit high-income residents the most -
reinforcing Hutto's point.
Whether the senator's playing of the resentment card is enough to
sink Sanford's proposal is unclear. Class warfare traditionally has
been a Democratic game. But some Republican S.C. legislators are
populists at heart. And many Republicans also are interested in
expanding health-insurance opportunities for working people.
By reshaping his income-tax reduction proposal, Sanford could
cancel out the resentment card. The state's top income tax rate of 7
percent applies to adjusted gross incomes of $12,650 - below the
poverty line for some S.C. families. That is unfair. The state could
provide real tax relief for low-income families by exempting
adjusted gross incomes below, say, $25,000 from the top S.C.
marginal income tax rate, while lowering that rate overall.
Higher-income taxpayers would still get a nice break, and the
hideous practice of overtaxing the working poor would end. Sanford
can immunize himself against political class warfare, in short, by
showing real sensitivity to S.C. families that are barely making it
in our still-too-marginal economy.
Careful, Gov. Easley
One trial balloon that deserves pricking is N.C. Gov. Mike
Easley's notion that part of the temporary half-cent sales tax
increase enacted in 2001, supposedly for two years, be made
permanent. The increase, which lifted the state sales tax rate to 7
percent, helped N.C. legislators deal with a billion-dollar budget
deficit that year but has remained on the books past its
"expiration" date.
Legislators this year voted to phase out the tax increase. A
quarter-cent dropped off the sales tax Dec. 1, and the remaining
quarter-cent is scheduled to drop off July 1.
Now, Easley is asking legislators: "Is there something we'd
rather do with that quarter percent to help those in the middle and
lower income [ranges], rather than just drop it?"
If some North Carolinians truly need state help, let Easley
propose a new plan, including a way to fund it. Keeping the
remaining "temporary" quarter penny would break the state's promise
to return it, and legislators shouldn't allow that to happen. |