Income tax relief is key to creating jobs in state

e-mail this story discuss this issue in our forums Guest column • Charlton L. Whipple: General Assembly key in aiding state's development (12/02/03) • Tom Tiller: Pollution in Upstate makes breathing difficult (12/02/03) • Edwin Leap: Relatives visiting nursing homes may not feel cheered (12/01/03) • Phil Bradley: I-85 Corridor Task Force would fuel area economy (11/29/03) • Greg Campbell: Attitudes must change to stop spread of HIV/AIDS (11/28/03) More details Mark Sanford, a Republican, was elected governor of South Carolina in November 2002. Previously he represented South Carolina's First Congressional District in the U.S. Congress from 1995 to 2001.

Or, speaking to the 144,000 South Carolinians currently looking for work, wouldn't your quality of life be better if you had a job and didn't have to consider moving to a state like Georgia where the unemployment rate is a full 2 percent lower than ours?

I believe the answer to each of these questions is a resounding "yes." Unfortunately, unlike what they're experiencing in Georgia (where the income tax rate is 6 percent) or Florida (where there is no income tax), job growth and small business growth here in South Carolina continue to be held in check by what is effectively the highest income tax in the Southeast and the fifth-highest income tax in the nation.

Simply put, we have a profound jobs and economic development problem in South Carolina that gets even worse every day we fail to address the profoundly anticompetitive income tax climate that exists in our state.

Two weeks ago, Commerce Secretary Bob Faith and I joined some friends in Greenville for the groundbreaking of the new auto research park — a huge economic development project that includes corporate partners like BMW, IBM and Microsoft. Given that the research park is in effect planting a seed for our state in an emerging, high-tech marketplace, my question is this: How do we improve the underlying soil conditions for economic activity in South Carolina so that we're maximizing opportunity not only for the BMWs and Microsofts of the world, but also filtering that opportunity down to the thousands of small businesses that form the backbone of our economy?

Our "Jobs and Economic Growth" plan does that. Along with a host of other pro-business ideas — ranging from worker's compensation reform to health insurance cost containment to small business regulatory reforms — our plan would most improve the underlying business climate in our state by immediately reducing the income tax rate by 15 percent, from 7 percent to 5.9 percent.

Why is income tax relief so important to our state's economic future? In addition to the impact it has on growing small businesses referenced earlier, I'll give you three more reasons:

Income tax relief is a key building block in creating jobs. During the 1990s, states that lowered their income tax rates experienced three times the job growth compared to states that raised income taxes. For example, when New Jersey lowered its income tax rate from 7 percent to 5.7 percent, 25,017 new jobs were created. On the other hand, when Massachusetts was considering a 1.2 percent increase in its income tax, economic models showing 117,029 lost jobs kept the state from doing so.

Income tax relief will stimulate the economic activity. This is clearly something we're seeing at the national level as President Bush's income tax cuts helped spur our nation's economy to an 8.2 percent growth rate last quarter — the highest increase on record since the mid-1980s. We now have a choice in South Carolina — we can either implement changes that have proven to stimulate job and economic growth in other states or sit back and hope our economy recovers.

Income tax relief will raise personal income levels. From 1960 to 1993, residents in states with low or no income tax saw personal income levels increase 25 percent faster than those living in states with high income tax rates. Also, states that cut income taxes during the 1990s now enjoy 41 percent higher personal income levels than states that raised income taxes. Unfortunately, South Carolina's personal income level is still 80 percent of the national average.

Soon, we'll present a spending plan that addresses the short-term budget crisis we're up against — a budget that balances immediate needs with long-term reforms designed to grow jobs, expand economic activity and raise income levels. Simply put, people can't pay taxes if they don't have a job. Some folks have proposed raising taxes, but I'm committed to holding the line against tax increases for that very reason.

South Carolina is at an economic crossroads. We can either follow the lead of states like New Mexico, where the Democratic governor is in the process of lowering the income tax rate from 8.2 percent to 4.9 percent to create jobs, or we can continue the policy of doing nothing that has only held us back as a state.

I'd ask for your help, namely by calling your legislators and encouraging them to support our plan. Together, we can keep our state home to this as well as future generations of hard-working South Carolinians.