The Palmetto Insider

The blog of the South Carolina Policy Council

Taxation Realignment Commission (TRAC) Meeting: September 9, 2009

with 3 comments

The first meeting of the Taxation Realignment Commission (TRAC) took place Wednesday. This 11-member commission, created by S 12, is charged with studying the state tax code with an eye toward attracting new business and residents. More specifically, the commission is required to submit a report evaluating the state tax code with specific emphasis on:

  • Sales and use taxes
  • State and local taxes
  • Fees and fines
  • Any other revenue sources that contribute to the Other Funds category of the budget
  • The FairTax

The first report from the commission must be submitted by March 2010 to the General Assembly.  

The meeting began with the election of Burnet Maybank (Senator Leatherman’s appointee) as chairman and Bob Steelman (Representative Dan Cooper’s appointee) as vice chairman. Thereafter the commission discussed the prohibition on lobbying set down by S 12 – namely that “commission members shall not receive information regarding the business of the commission from a lobbyist except through formal presentation to the commission at a meeting called in compliance with the Freedom of Information Act.”

This stipulation caused a great deal of debate, as members wanted complete clarification as to the extent they could interact with lobbyists. Craig Parks, with the Senate Finance Committee, informed all members that their contact with lobbyists, as well as their staff’s contact with lobbyists, must be limited to official TRAC meetings where information is made available to the public. After the clarification of the lobbyist prohibition, a corresponding memo was adopted by the commission. 

In the remainder of the meeting, TRAC members outlined their duties in greater detail as required by the legislation and developed criteria by which they would evaluate the tax code.  These criteria include: 

  • Adequacy: whether revenue is sufficient to sustain current and future budgets
  • Equity: both horizontal fairness (i.e., taxpayers with the same income should pay the same amount in taxes) and vertical fairness (taxpayers with different incomes should pay different amounts of taxes)
  • Efficiency: a system with the lowest possible administrative and compliance costs 

Brian Moody (Governor Sanford’s appointee) commented that he felt the goal of the commission is to find ways to spend less, but spend it more efficiently; as well as use the state’s tough economic times to be creative and make South Carolina more competitive. 

Moving forward, the commission decided to begin with the sales tax, with the goal in mind of lowering the tax and expanding its base. (This, of course, raises the possibility that the commission will recommend new forms of the tax, thus expanding its base and leaving the door open to keeping the rate the same or even raising it.) 

TRAC will also look at the possibility of taxing internet sales, but members were unsure about the constitutional implications of this proposal. As far as other taxes go, the commission decided the following:  

  • Income tax– TRAC will examine both marginal and effective rates on corporate and individual income taxes. 
  • Property tax– TRAC will evaluate the 6 percent assessment and the 60 or more current exemptions. Many such exemptions are dated and may no longer provide much benefit. 
  • FairTax – The commission only briefly mentioned the FairTax and did not elaborate on how it plans to study the issue. Citizens attending the meeting from S.C. Fair Taxwere upset the commission did not more specifically address the FairTax option, as specifically required by S 12. 

On the recommendation of Chairman Maybank, the TRAC notebook commission members received will not be posted on the web, leading to questions regarding transparency of the commission’s activities. Maybank instead thought the commission should just wait until they receive requests for the information from individual South Carolinians. Craig Parks asked that he be allowed discretion on this matter, stating that he planned to make links to the information available on the web. Minutes from each meeting will be made public only after a vote from the commission.  

TRAC plans to meet five times before the 2010 legislative session begins in January. The next meeting is tentatively set for September 30, 2009. This week’s meeting was in the Gressette building.

TRAC MEMBERS: 

Chairman: Burnet Maybank, JD         Appointed by Sen. Leatherman

Vice Chairman: Bob Steelman         Appointed by Rep. Dan Cooper

Brian Moody, CPA                              Appointed by Governor Sanford

Ken Wingate, CPA, JD                        Appointed by Governor Sanford

Jack Shuler                                        Appointed by House Speaker Harrell

Jimmy Addison                                 Appointed by House Speaker Harrell

Don Weaver                                      Appointed by Sen. President Pro Tempore McConnell

Ben Kochenower                               Appointed by Sen. Peeler

Charles S. Way, Jr.                            Appointed by Sen. Land

Kenneth Cosgrove                            Appointed by Rep. Dan Cooper

Ray N. Stevens                                 Director of Dept. of Revenue; ex-officio member

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Written by Cotton Boll Conspiracy

September 10, 2009 at 4:20 pm

3 Responses

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  1. TRAC is skirting the real problem- Local property tax- Act 388-(specifically the infamous 15% reassessment cap) – underminds both the 4% and 6% assessment ratios set forth in the constitution-guaranteeing tax inequity between the haves and the havenots.

    Reassessment caps cannot be applied equally and results in lower and middle income property owners subsidizing wealthy property owners(STI study 2004) to the tune of $372 million across the state- per BEA.

    The so-called fair tax is nothing more than a smokescreen for making the rich richer at the expense of the lower and middle class -a republican objective documented by the Washing Post Dec 2002

    Bob Henderson

    September 11, 2009 at 12:27 pm

  2. […] (TRAC) met for the second time on Wednesday.  On the agenda was the adoption of minutes from the previous meeting, the adoption of “Assessment Criteria,” a presentation by Dr. William C. Gillespie on the […]

  3. […] an approach, however, would likely have increased compliance costs even more. The Taxation Realignment Commission (TRAC) will also be studying the corporate income tax as part of its comprehensive review of state […]


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