Is South Carolina broke or morally bankrupt?

By Sen. Phil Leventis
Sumter, SC

With my legislative tenure coming to an end, I want to share something with my fellow South Carolinians. Our state is not broke, but we are teetering on the verge of moral bankruptcy in our failure to meet the needs of our citizens. That’s why I have introduced the TRAC Recommendation Act (S.1454) that eliminates or reduces many sales-tax exemptions. The nearly $1 billion this act will raise annually would be used to pay for education and local governments, which continue to be shorted due to lack of revenue.

During my 32 years as a legislator, I have been guided by the principle that government should invest in meeting the needs and aspirations of its citizens. This principle has been undermined by an ideology claiming that government is the cause of our problems and, accordingly, must be starved.

The real source of our problems is a government unwilling to invest tax dollars in itself and its citizens. When businesses strive to be competitive, they invest in their future. That is what we have to do today in South Carolina to ensure a more prosperous future.

We’re not broke. The problem is that narrow political ideology has trumped statesmanship. The lack of political will to fairly reform our tax code to meet our basic civic contracts for education and infrastructure leads our citizens to believe that “minimally adequate” is the best we can hope for.

In 2010, the Tax Realignment Commission (TRAC) was created to review the state’s tax code and recommend changes “designed to ensure that the state’s tax structure is balanced so that the system is adequate, equitable, and efficient.” The TRAC commissioners and staff did a thorough job of reviewing tax loopholes and inequities, and recommended reforms of sales-tax exemptions that could raise close to $1 billion the first year.

Sadly, ideology trumped common sense, and the Republican-created and -appointed commission’s goal was to use any new revenue to further reduce taxes and increase corporate subsidies, not pay our bills.

Our state’s fixation on being business-friendly is reflected in the Forbes ranking that puts South Carolina fifth in its “business friendly regulatory environment” but 44th in quality of life. Forbes ranks the quality of our labor supply at 22nd, far behind North Carolina (third) and Georgia (fourth). The message this sends is that South Carolina, with its lax regulations and unskilled labor force, is a cheap place to do business — but you might not want to live here.

To put the anti-tax ideology in perspective, consider that of all the industrialized nations, only Turkey and Mexico have a lower individual tax burden than the United States, according to the Organization for Economic Cooperation and Development. The anti-tax National Tax Foundation ranks South Carolina 43rd among the 50 states in taxes as a percentage of income, and dead last in per capita state and local taxes. You begin to wonder why we need to further reduce taxes when we can’t pay our bills.

The House’s budget cuts mandatory funding for education by $665 million and local government funds by $71 million and robs $118 million from the general fund to cover the sales-tax shortfall of Act 388’s property-tax swap. These spending levels are set by law, but education and local government funding obligations are ignored annually by budget provisos because of a presumed lack of revenue and a clear shortage of political courage. These cuts mean larger classes, fewer teachers, police and firefighters and deteriorating infrastructure, all of which combine to make our state less competitive.

The TRAC recommendations on sales taxes would raise nearly $1 billion next year and more in coming years. This is what we need to meet these mandatory spending requirements, and more comprehensive tax reforms would meet and exceed them for years to come.

I’m sponsoring this bill because there is no real legislative debate — and little public understanding — about how we could raise the revenue to pay our bills with fair and broad tax reforms while also improving our quality of life and strengthening our economy.

The critical debate I hope to spark is whether the role of our government is shaped by the special-interest groups who make the majority of campaign contributions, or by the citizens who pay the taxes. I believe that citizens are willing to pay fair and equitable taxes when they get their money’s worth. It’s called democracy, and it’s past time for South Carolinians to reclaim it.

Sen. Leventis is a Sumter businessman; contact him at philleventis@scsenate.gov.

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