With the college football bowl season behind us, South Carolinians are turning their attention to other matters, such as the start of the 2014 session of the South Carolina state legislature. One of the most noteworthy bills for taxpayers to look at in this early stage in the session is (S. 901), legislation introduced by state senator Katrina Shealy that would gradually scale back the income tax over a 5 year period and eventually do away with it all together. ATR supports this legislation, which, if passed, would make South Carolina more competitive with her neighbors, and conducive to job-creation, investment, and economic growth.
The benefits of being a no income tax state are well known. In the past ten years, states without an income tax have experienced higher GDP growth, greater gains in employment, and increased migration in comparison with their counterparts who still impose an income tax. Currently, South Carolina is ranked by the Tax Foundation as imposing the 13th highest income tax burden in the nation and also ranked 37th out of 50 in terms of Business Tax Climate. Doing away with the income tax would make the state a far more attractive place to live, start a business and create jobs, to the betterment of all citizens.
If S. 901 is enacted, it would provide $560 million in tax relief in the first year alone. At a time when South Carolinians have seen 20 federal tax hikes imposed on them by the Obama administration, it is now more imperative than ever that legislators in Columbia work to enact pro-growth tax reform to counteract these job-killing policies coming out of Washington and boost the state economy. Recently, neighboring North Carolina enacted a pro-growth tax reform plan that is sure to increase their competitiveness not only in the region, but in the nation as a whole. By 2015, North Carolina will have one simple, flat income tax bracket of 5.75%, compared to South Carolina’s rate of 7% for any income over $14,250. If South Carolina wishes to remain competitive with her neighbors, eliminating the income tax would be an excellent step towards doing so. Governor Haley has indicated that she supports this legislation, and all state legislators should do the same.