South Carolina needs every penny it can muster to pay for necessary services that have been underfunded for years. Among the services that deserve better funding are bridges, roads, secondary and higher education, prisons and mental health care.
Gov. Mark Sanford's proposal would cut the state income tax rate from 7 percent to 4.8 percent over 10 years and cost the state about $1 billion. The Senate plan approved last week would lower the income tax rate for small business from 7 percent to 5 percent and cost the state about $130 million a year.
The governor wants to make South Carolina competitive with Florida in attracting retirees and other people in addition to giving existing residents a tax break. A recent report from the S.C. Board of Economic Advisors revealed that while Florida lacks an income tax, overall its tax structure takes a bigger portion of earnings than South Carolina's does.
Florida has a higher cigarette tax, a tax on outpatient and inpatient hospital services, a tax on satellite television service and higher property taxes.
Beaufort County is a good example of what happens when wealthy retirees arrive. They build nice homes and build a large service economy, which creates a two-tier system. The people on the lower tier don't have decent or even affordable housing. A fast-growing community also needs all the tax dollars it can command to offset the cost of infrastructure that all the newcomers demand.
Sen. John Matthews, D-Bowman, told the governor last week that he doesn't share the goal of attracting wealthy retirees to South Carolina, according to The Associated Press. "The Hilton Head economy has hurt the indigenous people," Matthews said, by raising their cost of living in the area.
The fast pace of growth in this county is a prime example that people aren't moving elsewhere because of the personal income tax rate or the high cost of property taxes.
The Senate plan to reward small business, which is the backbone of South Carolina's economy, makes sense without stripping away vast sums of tax dollars.