Governor’s tax cut a boost to his high-income donors

Gov. Mark Sanford’s income tax cut proposal will not leave his big money campaign contributors behind, but while the top 1 percent of incomes will receive more than 25 percent of his income tax cut, the lower 50 percent will get nothing.

The major beneficiaries will be some of the same people who gave Sanford more than $6 million for his 2002 election campaign and who have been donating more than $100,000 per month the last two years — a total of $2.5 million since his inauguration in 2003. In addition, they have poured more millions into the campaigns of legislators backing the tax cut. Meanwhile, legislators of both parties say that their constituents want property tax relief much more than income tax cuts.

When I first began lobbying for Common Cause at the State House in 1987, a campaign for governor cost $2 million per candidate and a campaign for state Senate $50,000. Back then, the most important single driving force behind legislation was bribery. Lobbyists were giving legislators unlimited amounts of free liquor, free food, trips to domestic and foreign cities, golf clubs, drugs and cash.

In one instance, a lobbyist paid two legislators $75,000 each to fix a $20 million break in a tax bill.

In May 1990, I testified before the Senate Judiciary Committee that payoffs and shakedowns were widespread at the State House. Sen. Rick Lee, R-Spartanburg, denounced me at the hearing for impugning his integrity and that of his admirable colleagues in the Legislature. The following month, Sen. Lee and 16 other legislators were indicted by the federal grand jury for bribery and related crimes, and all but one of them were convicted. The scandal exposed by the FBI and the U.S. attorney, known as Operation Lost Trust, soon took down more than two dozen officials.

In the aftermath, the Legislature passed the current Ethics Act, which took effect in 1992. The act banned all lobbyists’ gifts, including campaign contributions, to state officials and candidates. It limited donations from other sources (such as those employing lobbyists) to $1,000 per primary, runoff or general election for legislative candidates and $3,500 for candidates in statewide races such as for governor.

At the time, veteran State House reporter Henry Eichel astutely predicted that campaign contributions would displace old-fashioned bribery as the major driving force behind legislation. Contributions have in fact displaced naked bribery and have skyrocketed in amounts. Legislative proposals are now driven by campaign contributions.

Gov. Sanford seems to be taking his cue also from President Bush, who showed in 2000 how his proposed tax cuts for the rich could attract huge campaign contributions from the wealthy. Raising unprecedented millions, Bush opted out of the public financing law in his 2000 primary (and again in 2004), the first major candidate to opt out since the law began in 1976.

The obvious lesson was that a proposal to cut taxes on the rich would draw their big campaign donations the way rotten meat draws vultures. It was also obvious from Bush’s flip-flopping that the political justifications for such tax cuts could be adroitly shifted — from cutting the budget surplus when there was too much economic growth to stimulating the economy when there was too little.

Sanford is faced with shrunken state revenues and a struggling economy. Of course, he has adopted the growth thesis.

Sanford’s tax cut would shift an estimated $100 million per year from state use for education, transportation or law enforcement, mostly to the rich, the same people who have given Sanford as much as $10,500 apiece for his prior campaign and who can legally give at least $3,500 for 2006. In 2002, many of these same donors also heaped money on the governor’s party, party caucus and legislators as well, and will do so again for 2006.

If a donor will save $10,000, $50,000 or $100,000 per year in state income taxes once the governor’s tax cuts are passed, a few thousand dollars in campaign contributions reaps big dividends quickly. Old-fashioned bribery has been replaced by big-money campaign contributions, and this is why when ordinary citizens want property tax relief, they instead get income tax cuts for the rich.

Mr. Crangle is executive director of South Carolina Common Cause.