Governor’s tax plan is wrong response to state’s situation

A YEAR AGO, Gov. Mark Sanford had a terrible relationship with legislators — a situation he had to address, or risk total failure. He went to work on that.

Recently, we’ve seen Sen. Glenn McConnell, once the most formidable foe of giving the governor more power, become a zealous advocate of the governor’s restructuring plan.

The governor put forth an unprecedented budget plan that for the first time set spending priorities and made tough calls, program by program. And for the first time, the Legislature said it would work from the governor’s plan. A huge step forward.

Now, the governor has enlisted the enthusiastic aid of House Speaker David Wilkins in promoting the governor’s dream of cutting the income tax.

This is a great thing for the governor because he always wanted an income tax cut. It’s a great thing for House Republicans because they can run for re-election on it.

But it’s a lousy thing for South Carolina.

I don’t know whether the governor is right or wrong when he says this reduction in the income tax rate will stimulate our economy and create jobs, by and by. It’s been known to work in the past. On the national level. Maybe. (There are so many variables involved in any large-scale economic trend that I am wary of claims regarding simple, direct causes and effects.)

I’m just saying that when you’ve cut essential services — schools, prisons, law enforcement, mental health, etc. — drastically for the last four years, and you start work on next year’s budget $350 million short of funding government even at its current degraded level, the correct and responsible response is most assuredly not to say, “Let’s cut taxes on the hunch that it will help us down the road.”

It takes a faith greater than most people have in their religion to cut taxes when revenue shortfalls are already this severe.

But let’s say this proposal did have a stimulant effect on the economy down the road, and that we knew it beyond a shadow of a doubt (as I fully believe the governor thinks he knows it). What does any of this do to help us deal with our current crisis? Nothing.

Here’s the responsible way to approach funding government: You decide what government really needs to do. You figure out what it will cost to do that — not a penny more, not a penny less. And then you figure out how to pay that price in a way that is as fair, as economically sound and as reliable as possible.

The great thing about Mark Sanford is that he has been more willing than any other state leader I’ve seen to undertake the first part of that process. He hacked his way through the jungle of state spending, program by program. Then he decided what he thought we could do without, and had the political courage to set it all out, no matter whose ox was gored. It was an awesome performance. He came up hundreds of millions of dollars short of what we need for education, but the rest of it was impressive.

The terrible thing about Mark Sanford is that he’s not willing to spend the same sweat and political capital on comprehensive tax reform. At least, not before he’s implemented this one cut that has been his obsession.

What’s really tragic is that this year, the stars were finally aligned for true tax reform. Several legislators have put forth bold plans for making sense out of the tangled thicket that has taxed some too much, some too little and failed to reliably produce the revenue we need to support, at the most basic level, the kinds of social infrastructure that only government can provide.

The leading plan even contained the governor’s vaunted income tax cut. But Tom Davis, who can be credited with much of the governor’s recent success with the Legislature, tells us that no plan that contained any offsetting tax increases, even if it were revenue-neutral, was going to go anywhere in the House this year. (A staggering thought, but unfortunately not an incredible one.)

So the governor offered the tax cut alone, and that proposal has sucked up all the oxygen, leaving more responsible plans flopping on the floor and gasping.

Why shove all other proposals aside to achieve this one tax cut? “Make no mistake about it,” said Mr. Davis. “It’s his number-one priority.” I had thought the governor’s No. 1 priority was creating jobs and raising incomes in South Carolina. And it is, Mr. Davis assures me. The tax cut is his plan for getting there.

But how do you get there without good schools, safe roads and at least a rudimentary social safety net? Who wants to invest in a state that’s falling apart, no matter how sweet the tax deal is?

Mr. Davis tries to make this all sound better by pointing out that after the first year, the cuts would only kick in if the state brought in $100 million more than the year before — at which point $62 million would go toward the cut. That is cold comfort when, to give but one example, the most reliable estimates say we’re $400 million to $600 million short of funding what our state leaders have promised to do for schools.

Bottom line: This is the wrong response to the situation in which our state currently finds itself. On this critical matter, the governor and the House leadership are abdicating their responsibility as stewards of this state.

Write to Mr. Warthen at bwarthen@thestate.com.