The South Carolina Senate Finance Committee proposes to almost double the highway tax passed by the South Carolina House of Representatives.
It looks as though more than $700 million in new taxes will likely be passed by the end of June and imposed upon South Carolinians by the end of summer.
State Sen. Tom Davis, in a common sense approach, seeks to utilize existing approved budget line items to meet the transportation need instead of dedicating these line items to other, unknown, future special project items.
Count me a skeptic, but fiscal conservancy makes sense and I appreciate Sen. Davis’s position on this issue. We need our roads fixed immediately in a business-like manner.
State level taxation certainly plays a big role in our everyday lives. South Carolina offers individuals many positive tax benefits including very reasonable property tax exemptions and rates.
We are very fortunate, as business owners, not to have a gross receipts tax.
However, with its higher income tax and limited exemptions, South Carolina can be quite burdensome when it comes to operating a small business.
The Tax Foundation (www.taxfoundation.org) posts various lists and rankings for the states in particular areas of concern. For example, one list demonstrates how the highest sales tax rate in the nation exists in Tennessee at 9.45 percent, with pricey South Carolina coming in higher than its neighbors (North Carolina and Georgia) to rank at #18 in the country, higher than New Jersey.
One study ranks state business climate. South Carolina ranks a poor #37, lower than Georgia and certainly lower than North Carolina.
The top 10 list demonstrates that a defining quality of a low tax rate state is the absence of a major tax base, such as income, sales or corporate taxation. While the absence of estate and gift taxes are great, as at the federal level, it’s not a big tax base to win the day as a top 10 low tax rate state.
South Carolina ranks poorly in the business climate index, especially for flow-through businesses, such as S corporation and limited liability companies, due in part to a very high individual income tax of 7 percent.
This rate ranks 12th in the country; again, higher than our neighbors. This high rate generally spoils our state’s qualification for a low tax jurisdiction.
Although South Carolina is not a low tax rate state (and tends to be punitive on small business owners that flow those high rates into their own personal returns), resident property owners, on the other hand, generally enjoy a very important top 10 ranking: the lowest state-level total tax burden.
South Carolina residential property owners, on average, enjoyed a state level average tax burden of 8.3 percent in 2011 and well below the national average of almost 10 percent.
With similar burdens today, prior to the implementation of this soon-to-be new gas tax, South Carolina ranked 9th in the nation and enjoyed tax freedom day on April 9, beating out North Carolina, Georgia and Florida.
Douglas S. Delaney, J.D., LL.M is a local tax and estate planning attorney in Bluffton. www.delaneylawfirmplansahead.com
