Meet the SC FairTax Act
The soon to be introduced South Carolina FairTax Act eliminates the state’s 7% personal income tax (which most small businesses also pay), the 5% corporate income tax, and an exemption-laden state sales tax. The sales tax currently exempts nearly 300 items from sales tax collection – accounting for an estimated $3 billion in uncollected revenue each year.
In their place, the South Carolina FairTax Act funds government at current levels (although it looks like the General Assembly stands poised to cut $1 billion from the $4.9-billion General Fund) with a broad-based 6% sales tax on new retail goods and services.
The Senate version of the bill (S-274) was pre-filed by Sen. Larry Grooms (R-Berkeley), who was joined by Senators Chip Campsen (R-Charleston), Tom Davis (R-Beaufort), and Mike Rose (R-Dorchester). The House version of the bill will be filed by Rep. Tracy Edge (R-Horry) in January.
The Act includes a rebate payment sent monthly to all valid social security cardholders who are South Carolina residents, to cover the sales tax expenses for groceries, medicine, and other necessities. Under the proposed plan, a married couple would have to spend $1,800 and a family of four would have to spend $2,400 per month on new retail goods and services before paying any net sales tax.
The South Carolina FairTax Act is modeled, in part, after the national effort of the same name. The national FairTax, as championed by Georgia Congressman John Linder, radio personality Neal Boortz, and 65 co-sponsors in the US House of Representatives, seeks to eliminate the personal and corporate income tax, Social Security and Medicare payroll taxes, capital gains and dividend taxes, the alternative minimum tax, and others in favor of a broad-based consumption tax.
The movement in support of the FairTax has grown steadily in recent years. Through countless volunteer hours by supporters and organizers in South Carolina, supporters now have an opportunity to place their vision for the national tax code in place at the state level.
Recent Census data reveals that 35% of the population growth in the United States went to the nine states without a personal income tax – Texas, Florida, Tennessee, Wyoming, South Dakota, Washington, Alaska, New Hampshire, and Nevada. While South Carolina’s population surged enough to gain a Congressional District, the state has been plagued for more than two consecutive years with double-digit unemployment.
Research compiled by economists Art Laffer and Stephen Moore, in a report entitled “Rich States, Poor States” for the American Legislative Exchange Council (available on www.alec.org), reveals that entrepreneurs are fleeing the high income tax states like California, Michigan, and New York and are shifting their operations to zero income tax states. Laffer moved his economic research firm from California to Tennessee to escape the state income tax. Similarly, South Carolina stands to benefit from an influx of new capital with the passage of this bill.
Other stimulative benefits of passing the South Carolina FairTax Act include empowering consumers by increasing their take-home pay. Consumers account for more than 70 percent of the total economic output and have been reluctant to spend money in the prolonged slow economy.
Also, realtors in border communities such as Rock Hill, Greenville, Aiken, and Hilton Head should benefit immediately, as citizens from Georgia and North Carolina move across the border to escape their states’ income taxes.
South Carolina residents are encouraged to contact their local legislators and ask them to support the South Carolina FairTax Act.
More information on the South Carolina FairTax Act can be found at www.scfairtax.org.
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