“Taxes are the dues we pay for a democratic society.” The descriptive observation by Justice Oliver Wendell Holmes reminds us that these dues educate our children, protect our lives and property and provide for our quality of life.
The amount of “dues” every resident and business pay to live in this democratic society should be predicated on a fair tax system. Unfortunately, South Carolina’s tax system has become unbalanced after years of tinkering without taking a comprehensive look at how these changes affect our overall tax structure. This patchwork of changes is forcing more of the burden on to businesses while giving local governments and school districts less flexibility in how they provide services to residents and businesses.
Today, South Carolina’s businesses pay 45 percent of all state and local taxes, which is up from 42 percent a year ago, according to the Council on State Taxation. Businesses in North Carolina and Georgia pay 36 percent and 39 percent respectively.
Last year’s tax shift removed school operations from the tax bills for owner-occupied homes and funded them with a 1 percent addition to the sales tax. The legislation removed the ability of school districts to raise taxes on owner-occupied homes. The main place that schools can go now to raise money is to the business community, which further exacerbates the problem of South Carolina businesses paying high taxes.
This example clearly illustrates South Carolina’s need to balance tax policy so that one sector of the economy is not unfairly burdened. At the same time, the tax system must ensure flexibility of resources so government can provide services at the level expected by citizens and businesses. It’s a delicate balancing act that must be approached deliberately and purposefully to avoid tying the hands of local governments or hurting business growth.
Comprehensive tax reform is a legislative priority for both the state’s business community and the local elected leadership of the state’s cities and towns. While sometimes it may appear the interests of the business community can be at odds with the priorities of local governments over issues like spending caps, in reality, we are all working toward the same goal — moving our state forward. In the same way that citizens and businesses need stability and predictability in their tax liability, governments also need stability and predictability in their revenues to provide services taxpayers demand.
Thriving businesses are drawn to strong cities with good schools, stable infrastructure and safe streets. The success of our state’s economic development efforts is directly tied to the strength of our cities and towns to provide the quality of life, services and amenities that taxpayers and businesses demand.
South Carolina must remain globally competitive. Strong businesses, strong cities and strong schools are dependent on a balanced tax system. We urge the General Assembly to take a comprehensive approach to reforming our tax system. Without it, we lose the opportunity to guide our state to a prosperous future.
Mr. DeLoach is chairman of the board of the S.C. Chamber of Commerce and chairman and CEO of Sonoco Products Co. Mr. Echols is president of the board of the Municipal Association of South Carolina and the mayor of Rock Hill.