Some South Carolina legislators are trying to pass a gas tax hike and block the income tax relief plan put forward by Gov. Nikki Haley during her State of the State Address last week. Today, Americans for Tax Reform President Grover Norquist sent a letter to the South Carolina State Legislature urging legislators to support Governor Nikki Haley’s proposal to reduce the state income tax. The proposal would better allow the Palmetto State to compete with nearby states for investments and jobs.
The letter reads as follows:
Dear Members of the South Carolina Legislature,
On behalf of Americans for Tax Reform and our membership across South Carolina, I am contacting you today to urge you to support Gov. Nikki Haley’s proposal to reduce the state income tax rate. There are two states in the region, Tennessee and Florida, that boast no income tax for individuals, families, and small businesses. North Carolina just cut their income tax so that it is now lower than South Carolina’s, and Georgia lawmakers are looking to follow suit. As such, it is imperative that South Carolina lawmakers use the 2015 session to cut the state income tax. Failing to do so will put the state at a disadvantage in the competition for jobs and investment.
Some legislators are proposing to raise the gas tax and ignore the proposal to cut the income tax. South Carolinians have been hit with over 20 federal tax increases in recent years; the last thing they need is another tax increase at the state level. That’s why it’s important that a gas tax increase be contingent upon the passage of an income tax cut. Otherwise, lawmakers will simply be voting for higher taxes.
Income tax relief isn’t just good politics, it’s good policy. Tax Foundation economist William McBride reviewed academic literature going back three decades and found, “While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions and monetary policy.”
In McBride’s survey of 26 studies, dating to 1983, he found “all but three of those studies, and every study in the last 15 years, find a negative effect of taxes on growth.” John Hood, former president of the John Locke Foundation, found that keeping state and local tax and regulatory burdens as low as possible fosters economic growth, when he analyzed 681 peer-reviewed academic journal articles going back to 1990.”Most studies find,” Hood stated, “that lower levels of taxes and spending, less-intrusive regulation correlate with stronger economic performance.”
I urge you to protect South Carolina taxpayers by voting for income tax relief this session. Americans for Tax Reform will continue to follow these issues closely throughout session and will be educating your constituents as to how you vote on these important matters.