The Palmetto Insider

The blog of the South Carolina Policy Council

TRAC Tax Plan: Stacking the Deck

with one comment

We talk a lot about the folly—and unfairness—of government choosing winners and losers through taxpayer funded economic incentives. But while the state is playing favorites and grabbing headlines, they are pursuing policies that hurt the real powerhouse of employment and prosperity in South Carolina—independent businesses.

Lawmakers are not alone in choosing who wins, and who loses, in our state. The Taxation Realignment Commission (TRAC) recently voted in favor of a package of likely tax increases and unlikely tax cuts. The likely increases include new taxes on groceries, water from your tap, and prescription drugs, among many others. The unlikely tax cuts include a modest reduction in the overall sales tax. Unlikely because a slow recovery, combined with continued growth in government hiring and various budget shenanigans, will come home to roost for the 2011-2012 budget year.

The losers from the TRAC proposals are  taxpayers, who will see higher taxes as more of what we buy becomes taxable—and overall tax cuts fail to materialize. The winners will be the same special interests that have received preferential treatment in the past. Two that leap to mind are Boeing and the film industry. Recent reports in The Nerve highlight that, while TRAC wants to increase taxes for citizens of South Carolina, the commission left in place enormous economic incentives for Boeing and the film industry. Another report in The Nerve projects that “Army Wives” will likely cost South Carolina taxpayers as much as $23 million by the end of its fourth season.

You might hope that TRAC’s efforts at “realigning” South Carolina’s tax structure would focus on real reform for all businesses and all taxpayers. Yet the results speak to the Legislature’s clear preference for special interests over fundamental tax reform. That shouldn’t come as a surprise. The chairman of TRAC, Burnie Maybank, is a key player in crafting special interest deals—including the incentive package for Boeing and the recently passed “Economic Development Competitiveness Act of 2010” (H 4478).  

In the end, the deck is stacked—against meaningful tax reform and against independent business in South Carolina.


Written by Robert Appel

August 5, 2010 at 12:46 pm

One Response

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  1. […] Late last month, TRAC approved its recommendations, which include taxing numerous items that have been tax-free in the past—groceries, prescription drugs, water—and reducing the overall state sales tax. Some special interest beneficiaries are conspicuously absent from the TRAC recommendations, including Boeing and the film industry. […]

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