Tom Davis: Lower Taxes for Everyone

By Senator Tom Davis

More bad news today from the SC Department of Employment and Workforce: Our state’s unemployment rate moved up (from 10.5 percent to 10.9 percent) in July, even as the nation’s trended down (9.2 percent to 9.1 percent). Also South Carolina’s average per capita income remains stubbornly low at approximately 80 percent of the national average.

South Carolina’s poor economic performance can be traced back to the decision by our legislature in the late 1990’s to exert more control over the state’s economy.

The attached graph by the Bureau of Economic Analysis, cited by the South Carolina Policy Council in “Unleashing Capitalism,” shows a direct correlation between diminished economic freedom in South Carolina and our citizens’ average per capita income.

One of the clearest indicators of increased state involvement in our economy is the growth in government economic “incentives.” As documented by our state’s Board of Economic Advisors, the total annual amount of special economic incentives given by the government of South Carolina to “targeted” businesses has increased from $35 million in 1998 to $525 million in 2008.

And as this graph shows, during that same time period our state’s per capita income ranking plummeted (note the direct correlation on the graph between the diminishment of economic freedom in South Carolina and our state’s per capita income):

It’s bad enough that politicians steer our tax dollars toward particular businesses, as if they were somehow better able to direct the allocation of capital than the free market. Even worse is that they do so with hardly any due diligence on the front end and zero accountability to the taxpayers on the back end.

State government in South Carolina has become a favor factory for those who can afford the pay-to-play game. The rules are simple: contribute money to elected officials, hire lobbyists with personal connections to committee chairmen, retain the private attorneys who actually draft the complicated tax bills, and then watch as the taxpayer money comes rolling in.

Our state tax code is a joke.

Thanks to over 100 special loopholes, we now exempt more in sales taxes than we collect. I agree with Chief Justice Toal, who referred to this arrangement as a “tyrannical exercise of arbitrary power.” And this state’s corporate welfare – while benefiting those with access to elected officials – results in higher taxes for everyone else who doesn’t.

There is nothing conservative about state government picking winners and losers in the private marketplace, and it simply amazes me that our Republican legislative leaders in Columbia continue to pump your money into efforts to steer the economy in specific directions.

We need to end the corrupt politics of favoritism, close the loopholes and cut taxes for everyone, across the board, so that all citizens and businesses pay lower taxes, not just the politically connected. Lower taxes for everyone promotes free market entrepreneurship and discovery – the true sources of prosperity.