Florida’s perfect mix for success

With my roots in Texas, I’ve lived a long life in seven states and the District of Columbia. But I’ve never been a resident in the state that might come nearest to fiscal perfection — Florida.

This feeling hit me when I recently read that, in the years 2003 and 2004, Florida generated a total of 291,000 new jobs — 11 times the rate of the nation. A high percentage of them were well-paid knowledge jobs. This is an economic miracle! While our population is one-fifth of Florida’s, it’s unhappily true that we produce less than 10,000 new jobs per annum and are fourth from the bottom in unemployment.

Florida has a Republican governor and super-majority Republicans in each legislative body. Under governors from both parties, Florida has done so many things right:

• It has no income tax.

• No long-term capital gains tax.

• No estate tax.

• It’s a right-to-work state.

• The commissioner of education is appointed by the governor. He and his board supervise everything, kindergarten through university.

• Admission to university is based on merit only. Floridians call their scholarships “Bright Futures,” and under a new system, a higher number of minorities graduate and fewer drop out.

• If a public school fails two years in a row, parents get vouchers for other public or private schools.

How can Florida run a high-growth state without the personal income tax that fuels our system? A 6 percent sales tax, that’s how; an incredibly efficient flat consumption tax that works. Such a tax, when properly policed, is hard to evade and produces half of Florida’s entire revenue. The rest is made up of taxes on corporations, local phone calls, beverage licenses, satellite dishes, cigarettes and a minuscule tax on stocks and bonds, which is being phased out.

Both South Carolina and Florida are relatively low-tax when compared with gorillas such as California, Michigan and New York, from which people flee. But, it’s not what you do, it’s the way that you do it. Florida’s tax system is simple, commonsensical. It is not hard to collect and enforce sales taxes. Income, capital gains and estate taxes are contorted and counterproductive and bring with them a hidden tax, the cost of preparation and intricate enforcement. They discourage investment, savings and in-migration.

South Carolina loses tens of millions on income not reported by the underground (crime, illegal drugs). Or from cash businesses run “off the books,” or employees paid and unreported. There are tens of thousands of daily transactions the state has no way of learning about or tracing.

Affluent retirees (black and white) pour into Florida to buy, build or rent second homes or principal residences. And, as we’ve seen, so does industry. And tourists who come back to stay. Such extraordinary growth puts a strain on any system. Quite suddenly, a state needs everything the word “infrastructure” entails: freight cars and vans at the ports; highways; stores; banks; stadiums; orchestras; massive new health care; more and better schools.

I love South Carolina from the mountains to the sea, but our state government seems always to nibble around the edges of problems. We specialize in halfway measures. Our real estate values lie dormant. We’re not running a hot hand at this juncture. We wall ourselves in.

We have a much better year-round climate than Florida. And we’ve got oodles of Southern charm. And Charleston. But are we going to keep on sitting around with our thumb in our ear and watch other states run rings around us, or are we going to wake up and smell the magnolias?

Mr. Cunningham lives in Orangeburg and has been president and CEO of five corporations.