SC FairTax = Jobs!

South Carolina’s corporate business climate is thriving. Boeing has been a huge success story in our area, and we recently got the great news that Daimler-Benz will be building a plant in North Charleston. But ask the average South Carolina family if they are better off than they were when the Great Recession devastated our economy starting in 2008, and you would get a lot of negative responses.
Most jobs are created in the small business sector, and most small businesses depend on consumers with expanding disposable incomes. However, South Carolina’s median household income is less than it was in 2007.  That has caused a lot of consumer-dependent small businesses to lay off employees or close entirely.
Van Atkins, who has operated Van’s Tree Service in West Ashley for more than 40 years, has reduced his workforce from 24 employees down to eight due to lack of consumer demand. “It was real traumatic having to let people go because we didn’t have enough customers for the first time ever,” said Atkins. “People don’t have the money any more to do the jobs they need done in their yards.”
Barber/stylist Kenny Todd, who works out of Polished Salon on Daniel Street in Avondale Point Business District, has observed his clients are going longer between haircuts. “People who used to get their hair cut every three weeks are now having it done every four or five weeks, “ he said. “It is discretionary spending, and when families have tight budgets, it is one of the first things they defer.”
There’s a solution in our General Assembly, which would help service providers like Atkins and Todd – the South Carolina FairTax Act (H-3211/S-26), sponsored by Rep. Chip Limehouse (R-Charleston) and Sen. Larry Grooms (R-Daniel Island).
The South Carolina FairTax plan immediately eliminates our state income tax and replaces the lost income tax revenue by repealing the exemptions in our sales tax code. It would lead to most South Carolina families keeping hundreds more dollars each month.
The South Carolina FairTax plan protects the poor by sending each household a monthly Family Consumption Allowance to cover their sales tax expenses for basic needs. A family of four, for instance, would have to spend more than $2,500 on new goods and services each month before paying any net sales tax. Under the plan, the state sales tax rate would remain at 6 percent. The law would not impact any local option sales taxes.
Art Laffer, President Ronald Reagan’s former chief economist, runs a firm which analyzes state tax policies. He moved his business from high income tax California to zero income tax Tennessee. In his biennial review of state tax policies, Laffer states, “It’s clear that income taxes have a decidedly negative impact on growth – we say with confidence that eliminating the income tax will improve a state’s economic lot.” Laffer’s analysis shows that 62 percent of the new jobs created in America from 2002-2012 were in the nine zero-income-tax states.
West Ashley resident Patrick Heath, who owns Head To Tail Day Spa and Inn on James Island, a pet grooming business, says the SC FairTax legislation would be great for his business. “People love their pets and want them to have the best they can afford,” said Heath. “When people get to keep more of their money, they will get their pets groomed more frequently and take advantage of our daycare services.” He also noted that he would have more money available to buy advertising and expand his customer base.
Let’s make Charleston as prosperous for small businesses as it is for major corporations. Passing the South Carolina FairTax Act will mean more jobs and higher pay. We’ll have more start-up businesses and fill the vacant retail spaces that give our community a blighted appearance. Becoming a zero income tax state will also attract wealthy retirees and entrepreneurs from other states and boost home sales.
John Steinberger is the chairman of the Charleston County Republican Party, a leading Fair Tax advocate, and a West Ashley resident. He can be reached at John.steinberger@scfairtax.org.