You know something’s up when Mark Sanford starts vetoing tax cuts

By CINDI ROSS SCOPPE

Associate Editor

BOY, JUST when you think you finally understand a guy ....

This was supposed to be a column about the good Mark Sanford vetoes. After his budget stunt and the child safety seat trek into libertarian la-la land, it seemed fitting to point out that most of his vetoes are smart, and we’d be a lot better off if the Legislature would sustain them instead of setting new land-speed records in its race to override him.

But I had to postpone that larger column because of what I discovered in a subset of the good vetoes: Our governor has declared war with the Legislature over its mad rush to slash taxes. Not just once, but time after time.

A new sales tax exemption for gold and silver bullion, vetoed. Tax cuts in the service industry, vetoed. A dollar-for-dollar tax break for people who invest in the information economy, vetoed. Extra tax cuts for new Orangeburg County businesses, vetoed. Extraordinary tax breaks for a certain big new retailer being courted in a certain governor’s home county, vetoed — and with it, by Mr. Sanford’s own admission, more than $30 million in individual income tax breaks.

As I read the veto messages, I found myself transported back in time, to my first meeting with a would-be governor who embraced the fact that how we tax either encourages or discourages certain actions. A guy who resisted the populist demands for property tax cuts that he said wouldn’t spur the economy, instead pushing income tax cuts he said would. (I’m still not convinced he’s right about income taxes, but I admired the fact that he thought you needed a reason to cut taxes in one of the nation’s lowest-tax states.)

That was before this year’s embarrassing demands for a tax cut as an end in itself: You won’t cut personal income taxes? Then how about a one-time income tax rebate? What about suspending the gas tax? Hey! What’s taking so long on that property tax cut?

Maybe that embarrassed him too. Whatever the reason, just weeks after telling my colleagues and me he had come to embrace the idea of comprehensive tax reform, here was the governor lecturing the Legislature on the need to apply a little logic to tax policy.

“Currently,” he wrote, “our tax code has far too many incentives carved out for only one area of the state or for one business that might come to our state.... Too often we look at things in a vacuum instead of stepping back and looking at it from a holistic approach.”

So no new sales tax exemptions until we purge the bloated list of existing exemptions, he wrote. No more economic incentives that “add one more item to the already cluttered piecemeal legislation in our tax code” without increasing per capita income. His Commerce Department, he wrote, will review our economic incentives and by January “report the current tax incentives that no longer serve their purpose.”

Most of the vetoed bills give tax incentives to new or expanding businesses. The vetoes highlight competing visions of job recruitment. Our Legislature has never met an “economic development” incentive it doesn’t love. Mr. Sanford speaks disdainfully of buying jobs and says the state should concentrate on high-paid jobs — a gutsy position for a guy who’s getting hammered by critics over our unemployment rate.

In one veto, he argued that “we have a finite number of dollars available for incentives,” and so granting special incentives to less-worthy ventures leaves less money available to give incentives to more worthy ventures. (Sort of like the way granting tax incentives for upper-class parents to send their kids to private schools would leave less money available to educate poor kids.)

The governor’s spokesman notes that economic incentives involve more than just tax breaks; there also are actual costs, say, for building roads. But the bills in question all deal with tax breaks.

Mr. Sanford’s boldest veto attacked a breathtaking package of tax incentives designed to lure the elaborate outdoor-outfitting outfit Cabela’s to North Charleston. Supporters say the mega-stores become tourist magnets, and therefore deserve incentives. But Mr. Sanford argued that the deal “would break from the underlying philosophy that has driven our state’s incentive structure for decades,” by giving incentives to a retailer. That’s wrong, he said, because it would force home-grown sporting goods stores to subsidize their competition — and because retailers often provide low-paying and part-time jobs.

Other veto targets also would subsidize low-paying jobs, by granting income tax credits for new service and distribution jobs that pay less than the average wage in their counties, as long as the wage is higher than the state average.

The governor’s critics will give you their there-he-goes-again, Mark Sanford can’t play well with others line: He vetoes massive economic development bills that are packed with provisions he supports, all because of one little part he doesn’t like. And they’re right: That is what he did.

But Mr. Sanford is right about what a bad precedent the give-aways set, and what a precipitous slide they are down the slippery slope we’ve been teetering on since Carroll Campbell first convinced the Legislature to offer massive tax breaks to reel in industry. And he’s right about what a convoluted mess our tax code has become.

Unfortunately, the Legislature sustained only one of those vetoes — on the bullion bill. Even worse, the Legislature just spent another session demonstrating it has no appetite for a rational tax system.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571.