Yet another trained economist has agreed with many other fiscal and economic experts to recognize that South Carolina's tax system is broken. Dr. Peter Calcagno, professor of economics and director of the Center for Public Choice & Market Process at the College of Charleston, makes the case for what I have been advocating since my arrival in the South Carolina Senate.
In a recent piece in the Charleston Post & Courier, Dr. Calcagno argues that South Carolina's fiscal health could be improved in very short order by fully adjusting income tax rates for inflation, and reconsidering its economic development subsidies and tax credits. While Calcagno doesn't offer any specific policy recommendations to address his economic development theory, his trust in efforts to improve the attractiveness of the overall business environment is a familiar call.
During the highly politicized road improvement debate of the last legislative session I introduced a standalone bill, and subsequently an amendment to the road funding bill, that would have addressed the very issues Dr. Calcagno brings forward. These efforts however were killed by an unholy alliance of typically opposed factions. The left, that believe that government can better distribute private wealth, and the opposite extreme whose no tax dogma even prevents the overall lowering and improvement to the fairness and effectiveness of the South Carolina tax code.
My bill would have reduced overall income tax rates on all South Carolina income tax payers by not only adjusting brackets by inflation as suggested by Dr. Calcagno, but also reducing the rates for all income tax payers. It would have also reduced the highest in the nation industrial tax rates on South Carolina businesses. After all, these high rates are why state and local governments are forced to offer subsidies and tax credits in the first place.
It's not hard to follow the economic thread of benefit from these two changes. First, workers have more money in their pockets which allows them to save or spend more in the private sector, and better care for their families. Industries, both existing and those attracted here by lower operating costs, will have more capital to invest in equipment and people, thus adding wealth and jobs. As more opportunities enter our communities, wages increase. Both of these tax code changes ultimately result in increased private and public revenues.
Solutions are out there if we are willing to trust in the economic principles that built this great country and moved billions out of poverty across the globe.
Read professor Calcagno's full OP/ED here.