Saving Taxpayers $1.2 Billion

Having lived my entire 47-years in Blue Ridge, I have seen Greenville County, and indeed South Carolina, go through a lot of changes: some good, some bad.

A few years ago I decided to run for State House of Representatives. As a husband, father, and business owner, it was not an easy thing to commit the time to, but my concern was that South Carolina’s economy was being hurt from an antiquated set of laws.

Particularly outdated was South Carolina’s tax structure, which is riddled with arcane restrictions, unnecessary regulations, and special exemptions that punish taxpayers while benefiting special categories of businesses.

As an accountant, and having served on the Board of Trustees for Coastal Carolina University, it seemed plain to me that our state’s economy would continue to struggle as long as we refused to confront the rat’s nest our tax system has become over the last century.

My goal in seeking election to the House was to bring common-sense conservative reforms to Columbia. I have lived up to my promise to the voters by bringing these issues to the forefront.

As a Representative, I have personally introduced more than seven significant pieces of legislation aimed at overhauling the tax code and reducing the tax burden on families and employers. Many of these bills were created when I chaired a special Republican Caucus Committee to formulate tax policy. I have more details about each of these bills on my web site (www.TommyStringer.com) but let me give you a synopsis of the most important ones.

Reduce Income Tax on Small Business (H4996) – By lowering the pass-through income tax rate on small business owners 2%, this bill benefits a category of companies that are our largest employer by saving them nearly $65,000,000 a year. I am pleased to say that this bill actually became law.

Lower Manufacturing Property Taxes (H4993) – South Carolina has the 4th highest business property taxes in the country. By lowering the property tax rates on manufacturing property to equal commercial property rates, we would have saved employers nearly $250,000,000. After debate in sub-committee, the bill was killed.

Eliminate Sales Tax Exemptions (H4995) – If you have a good lobbyist you can get a special sales tax exemption for your product. This bill would have eliminated over 60 sales tax exemptions that benefited special interests and included a corresponding sales tax rate reduction. Remember, every sales tax exemption shifts the burden to other items that are taxed – and to a narrower group of taxpayers. The bill passed the House only after 40 of the exemptions were restored. It died in the Senate.

Flatter Income Tax (H4997) – In an effort to get us closer to a flat tax, this proposal collapsed the five existing income tax brackets down to just two. The savings to taxpayers would have exceeded $78,000,000. After passing the House it died in the Senate.

Lower Commercial Property Taxes (H4998) – This bill would have made South Carolina more competitive by lowering the property tax assessment ratio on commercial property by 1%. Only three states in the whole country have a higher business property tax. Tax savings were predicted to be approximately $827,000,000. The bill died in sub-committee.

Flatter Income Tax II (H4511) – A second attempt at income tax relief was to eliminate all income tax brackets and replace it with just one 3.5% rate. This was a true flat tax bill and eliminated all exemptions and deductions. It allowed one credit for low-income workers. The savings to taxpayers would have been roughly $150,000,000. It was never even debated in sub-committee.

Road Repair Funding Reform (H3645) – Easily the most controversial legislation I’ve been involved with, this bill proposed increasing the retail tax on motor fuels by $0.05 per gallon while indexing the cost to inflation. Since we can’t control inflation, the proposal placed caps which limit the amount of increase possible. The cost to road users would have been $175,000,000. After debate in sub-committee, the bill was tabled. Instead the General Assembly borrowed, via a bond bill, a half-billion dollars.

The poor condition of our roads and bridges remains the most common complaint I hear from citizens. The Department of Transportation projects that $29 billion is needed just to bring our existing roads and bridges up to standard.

After studying this issue carefully, I can see only three options: increase the gas tax, take the money out of the general fund, or borrow money. All of these options have problems.

The worst option is borrowing money. Debt service alone on the bonded indebtedness will cost us millions and just passes the costs to our children. Government debt never makes sense.

Taking the money from the General Fund has a perverse effect on our economy. Over half of the money in the General Fund comes from income taxes of people who work for a living. But the roads are used by everybody, whether you’re a CEO, on welfare, a tourist, or even an illegal alien.

My conservative philosophy will simply not allow me to “charge” South Carolina workers for a service that is used significantly by non-workers.

The current method of paying for roads is a user-fee-based system. By imposing a fair tax on people and businesses who buy gasoline we can be more or less certain that the people who are using the roads most are paying their fair share.

As promised to my constituents, my bills offered real reform and much needed tax relief. The combined tax impact of all of the bills would save taxpayers $1.2 billion. This savings only happens if the bills are passed by the entire General Assembly.

As a conservative, I believe our tax code needs a complete overhaul — rates need to be lowered, exemptions eliminated and the tax base broadened. If I win the Republican nomination on June 10th, I will continue my efforts to push reforms that protect the taxpayers of District 18.

 

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